1. No category

2012
Annual
Rep
Re
epo
por
or t
Annual Report 2012
Year Ended March 31, 2012
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
01
NISSAN Annual Report 2012
Vision
Nissan: Enriching People’s Lives
Mission
Nissan provides unique and innovative automotive products and services that deliver superior
measurable values to all stakeholders* in alliance with Renault.
* Our stakeholders include customers, shareholders, employees, dealers and suppliers, as well as the communities where we work and operate.
Contents
Financial Highlights
02
Year 2 Power 88
Performance
Fiscal 2011 Sales Performance
14
Fiscal 2012 Sales Outlook and
New Technologies
16
Message from the CEO
03
Financial Review
17
Message from the COO
05
Financial Statements
21
Message from the CFO
07
About Mid-term Plan
09
Corporate Data
Executives
25
Corporate Governance
Innovation & Power of brand
Message from Palmer EVP
10
Nissan’s Electric Vehicle History
13
Maintaining Trust Through Transparency
Information
27
41
This annual report presents financial results for the fiscal period ending March 31, 2012. The report also provides
shareholders with insights into Nissan’s management team. Through one-on-one interviews, various members of
executive management, including President and Chief Executive Officer Carlos Ghosn, discuss the philosophy and
direction of Nissan.
Report
Annual Report
http://www.nissan-global.com/EN/IR/LIBRARY/AR/
Sustainability Report
http://www.nissan-global.com/EN/COMPANY/CSR/LIBRARY/SR/
Profile
http://www.nissan-global.com/EN/IR/LIBRARY/PROFILE/
This annual report contains forward-looking statements on Nissan’s
plans and targets, and related operating investment, product
planning and production targets. Please note that there can be no
assurance that these targets and plans will actually be achieved.
Achieving them will depend on many factors, including Nissan’s
activities and development as well as the dynamics of the
automobile industry worldwide and the global economy.
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
NISSAN Annual Report 2012
Financial Highlights
2011
2010
2009
2008
2007
For the years ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2010
Mar. 31, 2009
Mar. 31, 2008
Net sales1
Millions of yen
¥9,409,026
¥8,773,093
¥7,517,277
¥8,436,974
¥10,824,238
Operating income (loss)
Millions of yen
545,839
537,467
311,609
(137,921 )
790,830
Ordinary income (loss)
Millions of yen
535,090
537,814
207,747
(172,740 )
766,400
Net income (loss)
Millions of yen
341,433
319,221
42,390
(233,709 )
482,261
Comprehensive income
Millions of yen
290,600
189,198
—
—
—
Net assets
Millions of yen
3,449,997
3,273,783
3,015,105
2,926,053
3,849,443
Total assets
Millions of yen
11,072,053
10,736,693
10,214,820
10,239,540
11,939,482
Net assets per share
Yen
750.77
703.16
663.90
644.60
860.17
Basic net income (loss) per share
Yen
81.67
76.44
10.40
(57.38 )
117.76
Diluted net income per share2
Yen
—
—
—
—
117.56
%
28.4
27.4
26.5
25.6
29.4
%
11.22
11.30
1.59
(7.62 )
13.68
Times
10.79
9.65
77.02
—
7.00
Millions of yen
696,297
667,502
1,177,226
890,726
1,342,284
Millions of yen
(685,053)
(331,118 )
(496,532 )
(573,584 )
(867,623)
Millions of yen
(308,457)
110,575
(663,989 )
(135,013 )
(307,002)
Millions of yen
840,871
761,495
746,912
584,102
Millions of yen
(619,863)
(293,254 )
29,658
387,882
(180,232)
157,365
(34,775)
161,513
(35,099)
155,099
151,698
155,659
159,227
(27,816 )
(17,600 )
(20,107 )
(21,308)
159,398
157,624
160,422
163,099
(28,089 )
(17,908 )
(20,649 )
(21,686)
Net assets as a percentage
of total assets
Return on equity
Price earnings ratio3
Cash flows
from operating activities
Cash flows
from investing activities
Cash flows
from financing activities
Cash and cash equivalents
at end of year
Net automotive
interest-bearing debt
Employees4, 5
Number
( ) represents the number of part-time
employees not included in the above
numbers
02
1,153,453
Notes: 1. Net sales are presented exclusive of consumption tax.
2. Diluted net income per share for the fiscal 2008 is not presented because a net loss per share was recorded although dilutive securities existed. Diluted net income per share for fiscal
2009, fiscal 2010 and fiscal 2011 is not presented because the Company had no securities with dilutive effects.
3. Price earnings ratio for fiscal 2008 is not presented because a net loss per share is recorded.
4. The number of part-time employees has been changed to present the average number of part-time employees for the fiscal 2008 compared with the year-end part-time employees for
the previous fiscal years.
5. Staff numbers, which are presented as the lower numbers in the “Employees” line, include those of unconsolidated subsidiaries accounted for by the equity method as reference data.
Year 2 Power 88
Innovation & Power of brand
Performance
Message from the CEO
Message from the CEO
Corporate Data
Corporate Governance
03
NISSAN Annual Report 2012
Firing on All Cylinders:
Nissan Power 88 Gains
Momentum
In fiscal 2011 we launched our mid-term
business roadmap, Nissan Power 88, and made
solid progress toward achieving the milestones
it sets for us. Our robust partnerships and our
work to enhance Nissan’s brand and sales
power are paving the way for further growth.
Carlos Ghosn President and Chief Executive Officer
Moving Ahead with Power
Fiscal 2011 was a record year for Nissan in terms of sales and growth. Despite natural disasters
and currency exchange headwinds, we demonstrated our ability to manage successfully through
crisis, quickly focusing on the actions required to protect the company and to ensure business
continuity. Against a turbulent environment caused by factors out of our control, we made
substantial progress across many fronts during 2011. In June, we unveiled a comprehensive,
structured mid-term business plan: Nissan Power 88, a six-year program for growth.
The word Power symbolizes our goals for brand and sales development, combined with greater
focus on the overall customer experience. The numerals 88 represent our targets of 8% global
market share and a sustainable 8% operating profit margin. The six-year timeframe reflects our
confidence to make the necessary strategic investments in products, technologies and
geographic growth that will benefit the company far beyond the end of the plan.
Nissan made progress on multiple fronts during 2011. We made new investments to expand our
global manufacturing footprint and we further utilized our Alliance with Renault and our growing
network of partners. In China, Nissan’s largest global market, we started production of the Tiida
hatchback at the second Huadu plant. Huadu is now our largest manufacturing facility worldwide,
with annual production capacity of 600,000 units, illustrating the strength of our joint venture with
Dongfeng, our Chinese partner. In Brazil and Mexico, we announced new manufacturing plants in
Resende and Aguascalientes, respectively. These investments will contribute to production capacity
in the Americas of 2,000,000 units by 2014, up from 1,200,000 units last year (2011).
In March, we announced the return of Datsun. We are now preparing for the return of this
iconic brand in India, Indonesia and Russia starting in 2014, bringing modern, high-value and
robust products to the rapidly expanding middle classes in these important growth markets. In
2011, our light commercial vehicle business passed a significant milestone with sales exceeding
1,000,000 vehicles for the first time and keeping us on track to make Nissan the world’s largest
LCV manufacturer by 2016.
Partnerships and Global Reach
Nissan has the most enduring and successful network of global partners. This network extends
from our Alliance with Renault to our growing strategic cooperation with Daimler, Ashok Leyland,
Mitsubishi and now AvtoVAZ. At a time when many manufacturers are just starting to work
together, Nissan has a proven track record of managing successful relationships with other
automakers.
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Message from the CEO
Corporate Governance
04
NISSAN Annual Report 2012
In 2011, valuable progress was achieved with our current partners, and new partnership were
established. Together with Renault, we delivered an incremental €1.75 billion of additional synergies.
As part of our growing partnership with Russian partner AvtoVAZ, we invested €400 million to
produce five vehicles across three brands at the Togliatti facility. The Alliance announced an all-new
entry Infiniti model to be created using Daimler’s latest vehicle architecture, and we will manufacture
engines for Mercedes and Infiniti at Nissan’s Decherd engine plant in the United States.
In partnership with Ashok Leyland, we started production of the Dost, a compact and affordable pickup
truck that will help us grow our LCV presence in the Indian market. And with Mitsubishi, Nissan
established a new joint venture to lead the design and engineering of an all-new mini car in Japan.
During 2012, Nissan will completely renew three large-volume global models. The first is the
new Altima, which was revealed in April at the New York International Auto Show. In total, we will
launch 10 all-new vehicles in 2012 including the Pathfinder, Sylphy/Sentra, NV350 Caravan and
a long wheelbase version of the Infiniti M sedan.
Of the 90 new technologies we will launch during Nissan Power 88, 15 will start this year,
including an expanded multi-sensing system built on our Around View Monitor image processing
technology. We will also launch our next-generation XTRONIC continuously variable transmission
(CVT). Nissan is the recognized global leader in CVTs, and this latest generation provides a fueleconomy benefit of up to 10% compared to the current model. Fuel-saving technologies are part
of our Blue Citizenship program that guides our environmental, safety and philanthropic actions.
During Nissan Power 88 we will invest 70% of our advanced R&D budget into environmental
technologies, including those focused on delivering zero-emission leadership.
We will continue our expansion into new and emerging markets during 2012. We are launching
the first product from our new Chinese local brand, Venucia, which allows us to compete for the
first time in the four million strong entry segment of the Chinese market. In Russia, together with
our partners Renault and AvtoVAZ, Nissan is working toward a 40% share. We expanded our
relationship with AvtoVAZ last May (2012), and in the second half of this year (2012), we will
launch our first entry-level car built locally at the AvtoVAZ plant in Togliatti, the Almera.
At the same time, by no means are we neglecting our premium business. We opened the new
global headquarters for Infiniti in Hong Kong in May 2012. In the same year, we will add new
markets for Infiniti, such as Chile and Australia, as we drive toward our sales target of 500,000
units across 70 markets by 2016.
A Bright Future for the Nissan Brand
Under Nissan Power 88, we have made both brand power and sales power specific focuses for the
company. A strong brand helps our business in every measurable area of the sales and marketing
process, from overall opinion to purchase intention to the revenue we generate from every vehicle
sold. We will also focus on enhancing overall opinion. Based on the high statistical correlation
between overall opinion and market share, this measurement, combined with revenue growth, is the
most cost-effective yardstick for growing our market share. Our efforts are being recognized: last
year Nissan was named both a top 100 global brand and the most improved brand by the influential
Interbrand Group. This year, we rolled out our first-ever global brand campaign in locations like major
international airports, reaching hundreds of millions of people with the same consistent message.
Our focus on sales power is driving the expansion of our dealer network in high-growth and
emerging markets, using a proven, scientific geomarketing strategy to optimize dealer coverage and
increase customer convenience. This year, we will expand our global network by opening 750 new
dealer locations, the largest annual increase during Nissan Power 88. We will also increase our
sales per outlet, as it is a key measure of operational efficiency.
As we start the new fiscal year, Nissan stands as a company unleashed for success and ready to
accelerate growth in all core markets its growth. Together with a stronger brand, investments in
products, technologies and global capacity, we have the tools to achieve Nissan Power 88 and
beyond. You can continue to expect the best from Nissan.
Carlos Ghosn
President and Chief Executive Officer
Year 2 Power 88
Innovation & Power of brand
Performance
Message from the COO
Message from the COO
Corporate Data
Corporate Governance
05
NISSAN Annual Report 2012
The Power We Need in
Volatile Times
Nissan addressed great challenges in the first
year of its new mid-term business plan. With a
focus on geographic and consumer diversity, as
well as environmentally friendly mobility options,
it epitomized the Nissan Way: “The power comes
from inside.”
Toshiyuki Shiga Chief Operating Officer
Strong Performance in a Tough Year
The 3/11 earthquake and tsunami inflicted enormous damage, mainly in Japan’s Tohoku region.
The catastrophe took numerous lives and deprived people of their normal, everyday life. Nissan
runs operations in the affected areas, and the company has been taking various actions to
support the disaster-stricken regions while restoring its business. Our support includes
implementing humanitarian aid, providing Nissan LEAF electric vehicles (EVs) and 4WD Patrols,
and dispatching a mobile library for children in the affected areas.
The disaster damaged our Tochigi and Iwaki Plants, and we had to suspend some operations
for two months because of the disrupted supply chain. Even in this state of emergency, a number
of actions helped us resume production and mitigate the effects on our operations outside Japan.
This is a fruit of our swift, companywide cross-functional/cross-regional initiatives based on the
Nissan Way: “The power comes from inside.” Our guiding principle for all employees, the Nissan
Way has been fostered through our business operations. It proved its worth again in addressing
such challenges as the strengthening yen and flooding in Thailand and helping to lessen their
impacts on us.
Despite a number of difficulties beyond
our control, Nissan’s sales hit an all-time
high in fiscal 2011, while profit grew yearon-year. We were put to the test, but we
fulfilled our potential and surmounted the
challenges. This success has not made us
complacent, the business environment
remains volatile, and global competition is
intensifying every day. We are increasing our
competitive edge to adapt to the changes.
Let me describe the changes we face and
what we are doing to adjust to them.
A Focus on Diversity
Needless to say, many manufacturers including automakers in Japan are struggling in cutthroat
competition in the global market. These companies share a common challenge: the Japanese yen is
at a historic high. Against this backdrop, We believe that retaining a certain amount of R&D and
manufacturing activities in Japan is critical to continue growing and competing in the global arena.
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Message from the COO
Corporate Governance
06
NISSAN Annual Report 2012
For example, the March, our compact car for the Japanese market, was produced previously in our
Oppama Plant in Japan but has been relocated to our consolidated entity in Thailand. The 100% allelectric Nissan LEAF is now produced at our Oppama Plant. Our creation of Nissan Motor Kyushu,
which capitalizes on its convenient location to import cost-competitive parts from other Asian
countries, is another undertaking.
Nissan is making moves to counter the effect of the strong yen. Production entities in Japan are
expected to play the role of “mother plants” with state-of-the-art, value-added monozukuri
(manufacturing excellence), and to keep on building strong technologies and skills. Meanwhile,
facilities in other regions are delivering regionally optimal products and services to customers at
competitive prices through regionally optimal sourcing. This is mandatory to succeed in the
competition with today’s rapidly advancing players, and Nissan is globally directing all its energies to
these initiatives.
Nissan is also making efforts to adapt to diversifying customer needs. We are seeing significant
growth in emerging markets, in particular the BRICs (Brazil, Russia, India and China) and
neighboring countries. Accordingly, diversification of customer needs is increasingly visible. We have
clear strategies for working on these new markets. One example is offering products and services
that cater to the needs of first-time buyers who drive car demand in emerging markets. Nissan will
reintroduce Datsun as a new brand for those customers and a counterpart to Infiniti, our premium
brand already available for luxury customers. By combining these with the Nissan brand, we are
actively developing an organization that grasps different market needs in more detail, enriching our
product line-up and extending market coverage.
Taking the Green Way Forward
Another Nissan initiative is our diversification of green technologies. Diesel engines and downsized
engines are in the mainstream in Europe, whereas plug-in hybrid electric vehicles (HEVs) and fuelefficient gasoline engines are gaining popularity in Japan and the United States. Needs are diverse
in emerging markets, meanwhile, spanning everything from ethanol engines to Thailand’s eco-car
project and Indonesia’s green car program. Our technological pillars are zero-emission technologies
represented by EVs and our PURE DRIVE technologies including clean diesel, the XTRONIC
continuously variable transmission and HEVs. The benefits of Nissan LEAF are not limited to vehicle
functions. We are also working on the “LEAF to Home” power supply system, which lets users store
electricity in batteries during the low-demand night and supply it to their household in the peak
daytime hours.
It is not easy to develop diverse green technologies, including zero emission and PURE DRIVE, on
our own. Our Alliance with Renault and our other partnerships play an important role in this aspect.
Nissan has been fostering a successful win-win relationship since the start of the Renault-Nissan
Alliance in 1999. In addition to economies of scale, we have obtained excellent results in strategic
joint operations and other areas that benefit both parties. We enjoy a strong network of partnerships
around the world, including our joint venture with Dongfeng in China, a joint operation with Ashok
Leyland in India and a capital alliance between the Renault-Nissan Alliance and AvtoVAZ in Russia.
This network enables us to adapt to growing emerging markets, diversifying customer needs and
demand for a full range of green technologies.
The spirit of the Nissan Way informs all of our efforts to tackle the challenges of disaster recovery
and global competition. It is no exaggeration to say that the essence of what it takes to accomplish
the goals of Nissan Power 88, our new mid-term business plan, lies in the Nissan Way. As this spirit
makes itself felt throughout the organization, it is increasingly bearing fruit. We will continue evolving
as a carmaker with both flexibility and robust fundamentals, offering distinctive and innovative
products and services that delight our customers. “The power comes from inside” at Nissan, and we
intend to share it with the world.
Toshiyuki Shiga
Chief Operating Officer
Year 2 Power 88
Innovation & Power of brand
Performance
Message from the CFO
Message from the CFO
Corporate Data
Corporate Governance
07
NISSAN Annual Report 2012
Growing Yet Ready to
Address Any Situation
Nissan wrapped up the first year of its mid-term
business plan with solid performance across
the board. The company is positioned well to
continue pursuing the ambitious goals it set
for itself in Nissan Power 88, and is looking
forward to further growth in market share and
profitability as the plan moves forward.
Joseph G. Peter Chief Financial Officer
What changes did Nissan implement in response to last year’s disaster, and what did you
learn?
Broadly speaking, we did not fundamentally shift our strategy, plans or business model as a result of last
year’s disasters. Frankly, our experience during these events validated our existing plans—for the most
part, our responses were continuations of strategies, priorities and plans already in place.
In our localization strategy, for example, we have been working to better balance our manufacturing
and sourcing footprint to our sales footprint since the start of the financial crisis in 2008. Our goals at
that time were to reduce foreign currency volatility and cost. Today, we also see benefit in terms of
reducing supply-chain risk arising from production interruptions. These strategies and initiatives are in
various stages of implementation. In fiscal 2010, we began local production and sales of the V-platform
global compact car in Thailand, India, China and Mexico, and in January 2011, we announced a plan to
increase local production of fully built-up units from approximately 69% in 2010 to 85% by 2015 in the
Americas. This includes production in Smyrna, Tennessee, of the new Infiniti JX and Nissan LEAF in
2012, as well as the production shift of the next-generation Rogue from Japan to Smyrna in 2013.
A second example relates to our focus on a strong balance sheet and sustained free cash flow
generation. Our actions in recent years to prioritize free cash flow, eliminate automotive net debt and
reduce reliance on short-term debt greatly helped us to handle last year’s disasters. We now have a
much stronger automotive balance sheet and liquidity position—we continue to benefit from this even
today as we face renewed market volatility related to the euro-zone crisis.
Perhaps the key change we did make as a result of our experience during the disasters of 2011 was
to modify our purchasing process to enhance business continuity plans at the parts level, particularly for
critical components, and to mitigate certain supply concentration risks. These modifications, though, are
more evolutionary kaizen changes rather than fundamental overhauls to our sourcing strategy.
How do you evaluate the first year of the mid-term plan?
The past year has certainly been challenging as we worked to overcome the impacts of the natural
disasters in Japan and Thailand and the unrelenting strength of the yen. Notwithstanding the
adverse environment, I think it is fair to say that Nissan had a solid start to Nissan Power 88, making
progress in all of the key metrics of our business.
In fiscal 2011, Nissan’s global sales reached 4,845,000 units, a 15.8% increase from fiscal 2010
and an all-time record. We achieved another record with full-year global market share of 6.4%, up
0.6 points year on year. Our positive sales performance continued to be geographically broad based
as we enjoyed strong growth in many of the world markets.
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Message from the CFO
Corporate Governance
08
NISSAN Annual Report 2012
Looking at the financial metrics, consolidated net revenues reached 9.4 trillion yen, up 7.2% from
the previous year. Operating profit stood at 545.8 billion yen and our net income was 341.4 billion yen—
both of these measures are above the fiscal 2010 levels despite the significant negative year-onyear impact of the strong yen. Additionally, we generated strong automotive free cash flow of 379.5
billion yen. As a result, we increased our automotive net cash position to 619.8 billion yen. These
results are all the more striking when viewed in the context of the performance of the other
significant Japanese automotive companies during the same timeframe.
What are the main areas of your focus to ensure success for the plan?
Primarily, I will continue to work with Nissan’s leadership so that we can deliver exceptional results.
Nissan Power 88 represents an opportunity to grow our business, both geographically and in terms
of our products and technology. An important part of my job is making sure we have the capital for
this growth, which requires investment in new products, factories, distribution networks and sales
finance activities. In this regard, we will continue actions to sustain our free cash flow generation
and to strengthen our balance sheet.
Additionally, I will work with the management team to drive the achievement of benchmark
efficiency throughout our value chain. This involves close cooperation among Nissan’s leadership
and its teams to establish business models with clear objectives that will ensure that we meet our
mid-term goals.
How do you balance growth in market share and operating margin?
From my perspective, our goals of 8% market share and 8% operating profit margin are not things
to balance one against the other. When we pursue growth in sales volume or market share in the
right way, our premise is that it will lead to improved profitability. At Nissan, we have a disciplined
process in which investments are carefully scrutinized. We also have a robust business planning
process in which we review our strategies and investments, as well as risks and opportunities, in the
context of our changing business environment which allows us to identify parts of our plans that
need increased focus and ways to improve them. In this way, we can react to changing business
conditions in real time—a capability that has been successfully tested following the financial crisis
touched off in 2008 and in the wake of the natural disasters of 2011.
What are your thoughts on shareholder value?
The strategies and objectives of our mid-term business plan are designed to significantly enhance
shareholder value through business growth that drives higher revenue and profits as well as strong
sustained free cash flow generation. In this way we will enhance enterprise value while at the same
time maintaining a strong balance sheet and providing shareholders an attractive dividend.
Reflecting our confidence in the plan, and in spite of the current volatile and fragile global
economic environment, in May this year (2012) we announced our intention to increase the fiscal
2012 dividend by 25% to 25 yen per share. Over the Nissan Power 88 period, we have targeted a
minimum dividend payout ratio of 25% of net income, and we will continue to work to improve our
credit rating and strengthen our balance sheet further. Under this policy and our current outlook for
the Power 88 period, we project that the dividend per share will rise over the course of the mid-term
plan.
Joseph G. Peter
Chief Financial Officer
Year 2 Power 88
Innovation & Power of brand
Performance
Message from CEO
About Mid-term Plan
Corporate Data
Corporate Governance
09
NISSAN Annual Report 2012
Nissan is operating its business based on the mid-term plan,
Nissan Power 88 for the fiscal years 2011 to 2016. “Power”
derives its significance from the strengths and efforts we will
apply to our brands and sales. Our commitment is to renew our
focus on the overall customer experience, elevating Nissan’s
brand power and ensuringquality excellence for every person
who buys a Nissan car. “88” denotes the measurable rewards
from achieving our plan. We aim to achieve a global market share
of 8% from 5.8% in 2010, and we will increase our corporate
operating profit to a sustainable 8% from 6.1% in 2010.
Nissan is implementing 6 tactics under Nissan Power 88:
1. Brand power
To strengthen Nissan’s brand power, we will expand our strength in engineering and production to the sales,
marketing and ownership experience. We will raise the level of interaction with our customers to create a world-class
standard of service that will build lasting relationships with every Nissan car owner. We recognize that having a
stronger brand will help close the gap with our top competitors in every measurable area – from revenue generation
to overall opinion and purchase intention.
2. Sales power
Sales power in the mid-term plan refers to fully grasping the needs of customers in each market and drastically
raising sales volume and market share. In emerging markets, we will focus on building a robust dealer network with
market positioning and staffing optimized to meet the needs of local Nissan customers. In mature markets, where our
dealer network is already established, we will take a strategic approach to improve customer loyalty and improve
sales efficiency by increasing sales volume per outlet.
3. Enhancing quality
Nissan aims to make steady progress in improving product quality. During Nissan Power 88, our aim is to raise Nissan into
the top group of global automakers in product quality and elevate Infiniti to leadership status among peer luxury products.
4. Zero-emission leadership
Nissan has taken the lead as the all-time volume leader in dedicated electric vehicle sales. Nissan’s EV lineup will
include a light commercial vehicle and an all-electric premium car, to be launched by Infiniti in the near future.
Together with our alliance partner Renault, we intend to put 1.5 million EVs on roads worldwide by 2016. In addition,
Nissan continues to take a leadership role in every aspect from the development of batteries, chargers and vehicle
lineup to electric grid studies, battery recycling and the use of batteries for energy storage, so that we will contribute
to the establishment of sustainable mobility.
5. Business expansion
Regarding the 8% market share objective under Nissan Power 88, we estimate that 35% of the growth in volume will
come from mature markets and 65% will come from emerging markets. We will achieve this through a steady tempo
of new product launches averaging every six weeks, a continued focus on growth markets and the expansion of our
Infiniti and light commercial vehicle businesses. Investments in manufacturing capacity expansion, particularly in
China, North America, Brazil, Russia and India, will enable us to increase sales volume.
6. Cost leadership
We have been successful in reducing costs by 5% annually, due mainly to our cross-functional monozukuri activities
involving our supplier base. As our production footprint is increasingly globally, we will maintain this pace by
enhancing and deepening these activities in every Nissan production base across the regions. Moreover, evaluating
not only purchasing costs but also logistics and in-house costs, we have set an objective to reduce total costs by 5%
each year.
Together with a stronger brand, investments in products, technologies and global capacity, we aim to
achieve Nissan Power 88 and grow further beyond.
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Message from Palmer EVP
Corporate Governance
10
NISSAN Annual Report 2012
Message from Palmer EVP
Fastest Growing Brand
in the Industry
Andy Palmer Executive Vice President
Both internal indicators and external
measurements show marked increases in
Nissan’s brand strength over the past year.
With its market leadership in the EV segment
and its new Infiniti global headquarters
in Hong Kong, Nissan is delivering a
powerful, unified message of innovation and
excitement to consumers around the globe.
Can you provide your thoughts on the current status of the Brand?
There’s no doubt that the Nissan brand is improving, but how do you measure brand strength?
It’s very simple. If you can improve market share at the same time that you can improve your
transaction price, your brand has to be improving. It’s easy to increase volume with incentives or to
increase the price and let the volume drop. But if you can raise both at the same time, the only
explanation is that your brand has become stronger.
We’ve moved over the past 12 months from not being on Interbrand’s 100 Best Global Brands
list to 90th place in 2011. The list also shows us as the fastest-growing brand in the industry.
Likewise, in the BrandZ measurement, for the first time in many years, we have moved in the right
direction.
This year will be very pivotal with a lot of new products coming out. Can you give a
rundown on the LEAF, Altima, and other models? How will this be tied in with the brand?
The impact of Nissan LEAF on the brand has been amazing. If we go back three or four years,
people weren’t talking about Nissan as the brand of innovation. But now we’re at the front of the
discussion about electric cars. Nissan LEAF has put us on the technology map and on the tip of
people’s tongues. And the other new cars that are coming clearly represent an opportunity to
reinforce the fact that Nissan stands for “Innovation and Excitement for Everyone.”
One of our most important launches this year is the Altima. It’s in the big-volume segment in the
United States and represents our biggest opportunity for improvement. The previous Altima was
number two in the US market, and with the new model, which has been designed with everything we
know about motorcars, we will have an opportunity to go for number one, which will also boost the
brand.
The other new cars that are coming include the Sylphy, Note and Sentra. All of these launches
started with the question, how does this car contribute to “Innovation and Excitement for Everyone”?
Having great products is one thing, but having compelling stories to tell and having people buy into
those stories is another. Traditionally, that has been the job of Marketing and Communications.
A year and a half ago, we took the decision to combine these two organizations and to bring them
closer to the Product Planning and upstream organizations so that we could grasp the voices of the
customer much earlier. This also enabled the telling of stories about new car development in a more
compelling manner.
An example of such storytelling is the “WHAT IF_” brand campaign we have currently launched in
around 30 airports around the world. Some 750 million people will walk in front of our advertising
every year and get a single message each time: that Nissan stands for “Innovation and Excitement
for Everyone”.
We have the science to make great products, so if you can tell compelling stories and make sure
your sales operation has the power to back up the stories, you have a very powerful car company.
Year 2 Power 88
Message from Palmer EVP
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Performance
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11
NISSAN Annual Report 2012
The new Infiniti has been attracting a great deal of attention and appears to be
moving to a new level.
When you look across the industry, there are two types of luxury brands: those like BMW and
Mercedes, whose livelihood depends on selling luxury cars, and the rest, where the luxury line is part
of a major car company. Most of the latter are at the 100,000-unit level, one exception being Audi,
which appears to have a degree of autonomy from the Volkswagen Group.
So in looking at what we need to do with Infiniti, the first thing is to give it oxygen—give it space
from the Nissan brand so it can develop in its own way. Since space is geography, we decided to
move the head office. We looked at Europe, the United States, and Southeast Asia, and the perfect
position was Hong Kong. It’s the gateway to China and Southeast Asia, it’s only four hours flying time
from Japan, the English spoken there makes it easy to communicate with Europe and the United
States, and it has a major airport.
Secondly, we need talent. Selling in the premium and luxury market is very different from selling in
the mass market. So having been able to recruit Johan De Nysschen to head our Infiniti operations
which started on July 1 certainly brings credibility.
The final component is products that meet with the brand definition of “The Fusion of Inspired
Performance and Hospitality”. That will start with the JX, a product that is absolutely on fire in our
sales operations. Hopefully, we’ll break out of the 100,000-plus mire of brands and reach the
200,000 mark in FY12. Then, we can start to break away from the pack and close in on the German
premium and luxury brands.
What makes Infiniti different from the German luxury brands?
One key point to keep in mind is that once people reach a certain age and buy into German luxury,
they tend to continue to buy into it. So you need to catch your customer much earlier. These “Young
Premium Customers” are looking for something different from what their fathers are driving. If the
German brands are representatives of old luxury with conservative straight line design, we want to be
about modern luxury with curves and sexy designs. On a performance axis, we need to be equal to
the Germans, but we don’t want Infiniti to be performance “machines,” as one of the makers are
calling themselves. We want to be much more soulful, much more human and hospitable.
Also, we are not shying away from our Japanese heritage. Equally important to the Brand is
hospitality, which draws on our Japanese and Asian roots and describes how you should feel when
you get into one of our cars or step into one of our dealerships. The purchasing of an Infiniti should
be a pleasure. And I think that omotenashi—hospitality in terms of the design, the accommodating
nature of the vehicle, the design of our dealerships and the behavior of our salesmen and women—
will set us apart.
Nissan’s latest mid-term plan is the first to focus on Brand, rather than on the company’s
“recovery.”
Nissan Power 88 is the first mid-term plan we have gone into without a handicap. We have great
products in the pipeline and we have strong financials. So what are the remaining weaknesses?
They are Brand power and Sales power. So our latest mid-term plan is all about addressing those
“last weaknesses” of the company. If we do, the consequence will be the “88” in the plan’s name: 8%
global market share and 8% operating profit. But they are not the goals. The real goal is “Power”—
that is, Brand and Sales power.
So how do you elevate people’s perceptions about your brand to the levels the vehicles
themselves deserve? Marketing is not art, it’s science, and we have to put science into place that
allows us to manage the brand, to take actions and to be able to see the reactions.
How do you achieve customer loyalty and get people to keep coming back to Nissan?
More and more, it is hard to convince people by pure, “above-the-line” advertising alone. They are
referencing shared experiences through periodicals they trust like ADAC, What Car? and Consumer
Reports. Experiences shared online are also becoming vitally important. Last week (June 2012), we
opened a digital listening center in Chennai to listen for all the Internet chatter about Nissan or
Infiniti, sorting it into categories, and allowing us to react to the real and instantaneous voice of the
customer. If someone tweets something about Nissan, we’re listening, and hopefully we’ll react to
that. The quicker the reaction, the more you can reinforce that the Brand is very trustful.
Year 2 Power 88
Innovation & Power of brand
Performance
Message from Palmer EVP
Corporate Data
Corporate Governance
NISSAN Annual Report 2012
How has Nissan LEAF contributed to brand strength?
Nissan LEAF is an absolute example of stand-out innovation. By 2050, 70% of the world’s population
will be living in a city*1. If we look at units in operation per 1,000 people in 2009, the U.S. figure is 774
cars. In India, it’s only 31, and China is only 47. So there is going to be a huge rise in the number of
vehicles in these emerging markets in the next 20 years. Most of the rise is going to be in the city, so
something has got to give.
Nissan thus created the electric car. I’m not saying that every car should be electric, but about 10%
of the population naturally should drive an electric car. Why spend so much money on gasoline when
you can use a car that runs on much cheaper electricity? If 10% of the population moves to electric, a
lot of pollutants and carbon dioxide will come out of the air.
The World Health Organization estimates that 235 million people currently suffer from asthma. In
the U.K. for example, it has increased five times over the past 25 years. One of the causes is
pollutants, some of which are caused by motorcars. With more people living in cities, more efforts are
needed to keep pollutants out. Electric cars don’t expel pollutants, and the more of them we use in the
city, the cleaner the air will be for our children.
More than 80% of vehicle owners in the United States own more than one car. Interestingly, we’re
finding with our Nissan LEAF customers that in most instances they buy Nissan LEAF believing it to
be their second car, but they wind up using it as the first car. It is only for the occasional long journeys
that they use the second car, which they thought was the first.
We will have four electric cars in the first generation, the first and foremost being Nissan LEAF.
We’ve subsequently unveiled the e-NV200, an electric commercial vehicle. The third car is the Infiniti
LE, which is a genuine premium car that looks, feels and smells like an Infiniti. The fourth car, which
has yet to be unveiled, is going to be an entry car.
These four cars cover a full spectrum, and they all look like traditional cars. But in the second
generation, they won’t necessarily have to conform to traditional concepts. The engine doesn’t need to
be sitting in front, and you do not need the gas tank behind the rear seat. So as we start of thinking
towards the future, we’ll start to explore the freedom that the electric car gives to the designers and
engineers.
Other so-called environmentally friendly cars like hybrids took three generations to take root. Nissan
LEAF is remarkable in the fact that it is taking root in its first generation. We’ve sold over 32,000
Nissan LEAFs so far*2, and we are looking to sell 40,000 in 2012. This puts Nissan LEAF in the top
25% of all cars sold on the market. So Nissan LEAF is not niche. And being the EV gold medalist in
front of so many customers is a real driver of brand value.
*1 from “World Urbanization Prospects The 2009 Revision” by United Nations
*2 as of June 2012
12
Innovation & Power of brand
Year 2 Power 88
Performance
Corporate Data
Corporate Governance
CEO メッセージ
NISSAN Annual Report 2012
Nissan’s Electric Vehicle History
Nissan is committed to leadership in the field of zero-emission mobility. Toward this goal, we have engaged in
a wide range of activities over the years. Nissan LEAF, the world’s first mass-produced 100% electric vehicle
(EV), has already received numerous awards in Japan and around the world. Today its technologies and the
philosophy behind it are recognized by many of our customers, and the car is a force propelling the Nissan
brand value.
Below we introduce the history of Nissan’s efforts in the EV field to date.
s History
Nissan LEAF ’
Our Concept EVs
2009
First motor comes off line at Yokohama Plant
10/2009
First Nissan LEAF comes off line at Oppama Plant
Nissan City
Tokyo Motor Show
1991
FEV
Tokyo Motor Show
1995
FEV II Tokyo Motor Show
Hypermini Tokyo Motor Show
1970
1990
Displayed at Tokyo Motor Show
First inverter comes off line at Zama
2010
2000
8/2010
Nissan LEAF officially unveiled;
sales start in Japan and U.S.
10/2010
PIVO
Mixim
PIVO 2 12/2010
Nissan LEAF; Sales start in Europe
2011
2005
3/2011
New quick charger unit goes on sale
Tokyo Motor Show
NUVU
Land Glider
Townpod 2008
2010
9/2011
Paris Motor Show
Tokyo Motor Show
Paris Motor Show
APEC Summit
New Mobility Concept Geneva International Motor Show
Esflow Tokyo Motor Show
PIVO 3 2011
2012
“LEAF to Home”system for powering
residences announced
Tokyo Motor Show
Frankfurt International Motor Show
2007
2009
New services launched using Nissan LEAF drive information
2012
5/2012
e-NV200 Concept North America International Auto Show
Infiniti Emerge-E Geneva International Motor Show
Awards Won
■ 2010 Good Design Gold Award
(for“Holistic approach to promote zero-emission vehicle
[Nissan LEAF] and zero-emission mobility”)
■ 2011 European Car of the Year
■ 2011 World Car of the Year
■ 2012 RJC Car of the Year
■ Car of the Year Japan 2011–2012
Infiniti LE New York International Auto Show
Venucia e-concept Beijing Auto Show
Growing Worldwide Partnerships
Nissan is pursuing the goal of zero-emission mobility together with its Alliance partner Renault. To achieve new forms of mobility,
it is vital to cooperate with national and regional governments, electric utility companies and other firms all around the world.
The Renault-Nissan Alliance has forged partnerships in these areas aimed at the penetration of zero-emission mobility.
Seattle, WA
France
United Kingdom
Switzerland
Vancouver, BC
Tennessee
Ireland
Spain
China
Wuhan City
Portugal
Guangdong Province
Guangzhou City
Monaco
Hong Kong
Italy
Japan
Kanagawa Pref.
Miyazaki Pref.
Yokohama City
Saitama City
Kitakyushu City
Hakone
Massachusetts
Oregon
North Carolina
Sonoma County &
San Diego, CA
Phoenix &
Tucson, AZ
New South Wales
Mexico
Orlando, FL
Houston, TX
São Paolo, Brazil
New Zealand
Israel
Australian Capital Territory
＞
13
Please see our website for more information on our zero-emission activities. http://www.nissan-zeroemission.com/EN/
For information on our EVs, please see our website (Japanese language only) . http://ev.nissan.co.jp/
Year 2 Power 88
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Fiscal 2011 Sales Performance
NISSAN Annual Report 2012
Fiscal 2011 Sales Performance
Fiscal 2011 Overview
Fiscal 2011 sales results came to 4,845,000 units, up 15.8% year-on-year. For the full fiscal year,
Nissan’s sales were overachieved 4.2% of global total industry volume (“TIV”) growth, which
resulted in an overall market share of 6.4%, 0.6 points up from fiscal 2010.
In fiscal 2011, we launched five new models globally: the Tiida in China, the Lafesta Highway
Star in Japan, front-drive and rear-drive versions of the NV400 commercial van in Europe and the
Infiniti JX in the United States.
During fiscal 2011, the Nissan LEAF passed the sales milestone to make it the world’s most
successful electric vehicle. In total, we sold 23,000 units in fiscal 2011.
GLOBAL RETAIL SALES VOLUME
Global retail sales
Market share
5,350
(Units: thousands)
5,000
4,000
3,057
3,000
5.3%
3,389
5.6%
3,569
5.6%
3,483
3,770
3,411
3,515
+3.0%
5.5%
5.5%
4,845
+15.8%
4,185
+19.1%
(%)
+10.4%
8
6.7%
7
6.4%
5.4%
5.4%
6
5.8%
2,000
5
1,000
4
0
(Forecast)
’03
’04
’05
’06
14
’07
’08
Japan
In Japan, TIV increased 3.3% year-on-year. Our sales in
fiscal 2011 reached 655,000 units, 9.2% above the prior
year. Nissan’s market share rose 0.8 points to 13.8%.
Strong sales of the Serena and Juke contributed to our
share gains, while sales of the Nissan LEAF reached
8,700 units.
’09
’10
’11
’12
RETAIL SALES IN JAPAN
(Units: thousands)
1,500
1,200
900
600
655
+9.2%
690
+5.3%
600
300
Serena
0
(Forecast)
’10
China
In China, TIV increased 3.3% to 17.2 million units. Our
sales grew 21.9% to 1,247,000 units. Our market share
was 7.3%, up 1.1 points from the prior year. Five models,
Sunny, Teana, Sylphy, Qashqai and Tiida, achieved annual
sales of more than 100,000 units each.
’11
’12
RETAIL SALES IN CHINA
(Units: thousands)
1,500
1,200
1,247
+21.9%
1,350
+8.3%
1,024
900
600
300
Sunny
0
(Forecast)
’10
’11
’12
3
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Fiscal 2011 Sales Performance
15
NISSAN Annual Report 2012
North America
In North America, Nissan’s total sales volume increased
12.7% to 1,404,000 units.
In the United States, TIV increased 8.9% to 13.2
million units. We sold 1,080,000 units, up 11.8% from
the previous year. Our market share increased two-tenths
of a percentage point, to 8.2%, driven by strong demand
for Altima, Rogue and Versa. The Nissan LEAF also
contributed to this growth with total sales of 11,000
units. In Mexico, Nissan maintained its market leadership
with a share improvement of 2.2 points to 25.3% and
sales increasing 20.7% to 235,300 units. In Canada,
sales were up 5% to 87,500 units.
RETAIL SALES IN UNITED STATES
(Units: thousands)
1,500
1,200
+11.2%
1,080
1080
+11.8%
1,200
966
900
600
300
0
(Forecast)
’10
’11
’12
Altima
Europe
In Europe, TIV increased 1.7%. Nissan sold 713,000
units, up 17.5% from the prior year, and bringing our
market share to 3.9%. European sales excluding Russia
increased 9.4% to 552,000 units, while sales in Russia
increased 57.3% to 161,000 units.
RETAIL SALES IN EUROPE
(Units: thousands)
1,500
1,200
900
607
713
+17.5%
720
+1.0%
600
300
Juke
0
(Forecast)
’10
Other Markets
In other markets – including Africa, Latin America and
the ASEAN region – our sales volumes were up 16.4%
to 826,000 units. In those markets, Latin America
increased 33.2% to 225,600 units, with a particularly
strong performance in Brazil where sales rose by 94.8%
to 81,000 units. Sales in Indonesia also increased
sharply, up 41.8% to 60,400 units, while sales in India
more than doubled to 31,300 units.
’11
’12
RETAIL SALES IN OTHER MARKETS
(Units: thousands)
1,500
1,070
1,200
900
+29.6%
826
+16.4%
709
600
300
0
(Forecast)
’10
March/Micra
’11
’12
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Fiscal 2011 Sales Performance
Fiscal 2012 Sales Outlook and New Technologies
Corporate Governance
NISSAN Annual Report 2012
Fiscal 2012 Overview
We expect our global sales to reach 5,350,000 units, an
FY2012 SALES OUTLOOK
(Units: thousands)
increase of 10.4%, which is another record level for Nissan.
6.000
With a TIV assumption of 79,700,000 units, a 5.3 %
5,350
+10.4%
increase year-on-year, our global market share is expected
to grow from 6.4% to 6.7%.
Japan
4,845
5.000
+5.3%
During fiscal 2012, we will completely renew three of
our large volume global models. The first was the new
Altima which had been revealed at the New York
China
4.000
International Auto Show in April 2012. In total, we will
+8.3%
launch ten all-new vehicles in fiscal 2012 including the
Pathfinder, Sylphy/Sentra, NV350 and a long wheelbase
3.000
version of the Infiniti M sedan.
North America
+8.3%
In Japan, Nissan plans to sell 690,000 units in fiscal
2012, which will be increase of 5.3% from fiscal 2011.
2.000
Fifth generation Cima was launched in April.
Europe
In China, Nissan will get 1,350,000 units sales, 8.3% sales
+1.0%
volume growth in fiscal 2012. In addition to all-new Sylphy
1,000
and our new Chinese local brand model, Venucia D50 were
Other Markets
+29.6%
launched. Another Venucia model will be launched.
In North America, Nissan assume 1,520,000 units
(Forecast)
0
sales, 8.3% growth of sales volume from prior year.
’11
’12
In Europe, Nissan will plan 1.0% sales volume growth
with 720,000 units sales.
Nissan plan to grow up significantly in other regions. 29.6%
growth, 1,070,000 units sales is planed in other regions.
(All figures are based on the forecast as of May 11th 2012)
Cima
Sylphy
Altima
New Technologies
In fiscal year 2012, we will introduce 15 new technologies. Examples of new technologies are as following.
• Multi-Sensing System which is built on the Around View Monitor image processing technology is
now advanced to detect moving objects and notify the driver.
• Next generation XTRONIC CVT. Nissan is the recognized global leader in CVTs and this latest
generation provides a fuel-economy benefit of up to 10% compared to the current model.
We are introducing a large number of innovative technologies.
Multi Sensing System
16
Next Generation XTRONIC CVT
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Financial Review
NISSAN Annual Report 2012
Financial Review
Fiscal2011FinancialPerformance
Netsales
For fiscal year 2011, consolidated net revenues increased
7.2%, to 9.409 trillion yen, which reflected by sales volume
increase in spite of the strong yen.
NET SALES
(Billions of yen)
12,000
9,000
Operatingprofit
Consolidated operating profit totaled 545.8 billion yen, which
was improved 1.6% from last year. In comparison to last
year’s consolidated operating profit, the variance was due to
the following factors:
• The 170 billion yen negative impact from foreign
exchange came mainly from the appreciation of the yen
against the U.S. dollar.
• The increase in energy and raw material costs was a
negative 115.6 billion yen.
• Purchasing cost reduction efforts resulted in a saving of
200.1 billion yen.
• Volume and mix produced a positive impact of 223.6
billion yen.
• The increase in selling expenses resulted in a 151.3
billion yen negative movement.
• R&D expenses increased by 33.1 billion yen.
• Sales financing contributed 49.8 billion yen.
• Other items produced a positive impact of 4.8 billion yen.
8,773.1
8,437.0
9,409.0
10,300.0
7,517.3
6,000
3,000
0
(Forecast)
’08
’09
’10
’11
’12
OPERATING PROFIT
(Billions of yen)
1,200
900
700.0
537.5
600
545.8
311.6
300
0
–137.9
−300
(Forecast)
’08
’09
’10
’11
’12
IMPACT ON OPERATING PROFIT
(Billions of yen)
–151.3
537.5
311.6
–170.0
-147.5
FOREX
545.8
–33.1
+49.8
+223.6
–115.6
FY10
O.P.
17
+4.8
+200.1
Raw
material
/energy
cost
Purch.
cost
reduction
Volume/
mix
Selling
exp.
R&D
exp.
Sales
finance
Other
items
FY11
O.P.
Year 2 Power 88
Innovation & Power of brand
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Financial Review
Net income
Net non-operating profit deteriorated 11 billion yen from
positive 0.3 billion yen to negative 10.7 billion yen in fiscal
2011. The negative impact came from the equity in
earnings of affiliates by 23.9 billion yen, from 43 billion
yen to 19.1 billion yen in fiscal 2011. As a result, ordinary
profit totaled 535.1 billion yen, which was deteriorated by
2.7 billion yen from 537.8 billion yen in fiscal 2010.
Net extraordinary losses totaled 5.8 billion yen, an
improvement of 51.9 billion yen from the previous year’s
loss of 57.7 billion yen. This improvement was due mainly
to the positive impacts such as decrease of loss on
disaster by 9.7 billion yen, gain on negative goodwill by
24.1 and gain on sales of investment securities by 8.1
billion yen.
Taxes totaled 151.5 billion yen, an increase of 19.4
billion yen from fiscal 2010. Minority interests had a
negative contribution of 36.4 billion yen in fiscal 2011.
Net income reached 341.4 billion yen, an increase of
22.2 billion yen from fiscal 2010.
18
NISSAN Annual Report 2012
NET INCOME
(Billions of yen)
600
450
319.2
341.4
’10
’11
400.0
300
150
42.4
0
−150
−300
–233.7
’08
(Forecast)
’09
’12
Financial Position
Balance sheet
Current assets have increased by 4.2% to 6,610.1 billion yen compared to March 31, 2011. This
was mainly due to an increase in trade notes and accounts receivable by 81.1 billion yen, sales
finance receivables by 463.5 billion yen respectively, despite a decrease in cash on hand and in
banks by 233.4 billion yen.
Fixed assets have increased by 1.6% to 4,462.0 billion yen compared to March 31, 2011. This
was mainly due to an increase in construction in progress by 156.7 billion yen.
As a result, total assets have increased by 3.1% to 11,072.1 billion yen compared to March 31,
2011.
Current liabilities have decreased by 5.4% to 4,145.2 billion yen compared to March 31, 2011.
This was mainly due to a decrease in short-term borrowings by 348.5 billion yen, commercial
papers by 218.2 billion yen respectively, despite an increase in trade notes and accounts payable
by 195.8 billion yen.
Long-term liabilities have increased by 12.8% to 3,476.8 billion yen compared to March 31,
2011. This was mainly due to an increase in long-term borrowings by 455.5 billion yen.
As a result, total liabilities have increased by 2.1% to 7,622.1 billion yen compared to March 31,
2011.
Net assets have increased by 5.4% to 3,450 billion yen compared to 3,273.8 billion yen as of
March 31, 2011. This was mainly due to net income of 341.4 billion yen, despite an increase in
translation adjustments (loss) by 72.1 billion yen.
Free cash flow and net cash (auto business)
For fiscal year 2011, Nissan achieved a positive free cash flow of 379.5 billion yen. At the end of
fiscal year 2011, our net automotive debt improved significantly from last year to a net cash
position of 619.8billion yen. The debt structure has also improved, since the company reduced its
reliance on short-term borrowing.
We continue to maintain a close focus on our inventory of new vehicles. Inventory stood at
770,000 units at the end of fiscal 2011. The company continues to manage inventory carefully, in
order to limit its impact on free cash flow.
Year 2 Power 88
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NISSAN Annual Report 2012
Credit rating
Nissan’s long-term credit rating with R&I is A with a positive outlook. S&P’s long-term credit rating for
Nissan is BBB+ with a stable outlook. Nissan’s rating with Moody’s is A3 with a stable outlook.
CORPORATE RATINGS
Aa3
AA-
A1
A+
R&I
A2
A
A3
S&P
A-
Baa1
Moody’s
BBB+
Baa2
BBB
Baa3
BBB-
Ba1
BB+
10/03
4/04
10/04
4/05
10/05
4/06
10/06
4/07
10/07
4/08
10/08
4/09
10/09
4/10
10/10
4/11
7/11
7/12
Sales finance
Due to the increase in retail sales, total financial assets of the sales finance segment increased by
13.6 % to 5,014.9 billion yen from 4,414.3 billion yen in fiscal 2011. The sales finance segment
generated 140.1 billion yen in operating profits in fiscal 2011 from 100.4 billion yen in fiscal 2010.
Investment policy
Capital expenditures totaled 406.4 billion yen, which was 4.3% of net revenue. Despite the natural
disaster, the company used capital expenditures in order to ensure Nissan’s future
competitiveness.
R&D expenditures totaled 428 billion yen. These funds were used to develop new technologies
and products. One of the company’s strength is its extensive collaboration and development
structure with Renault’s R&D team, resulting from the Alliance.
R&D EXPENDITURES
R&D
% of net revenue
(%)
(Billions of yen)
8
600
448
450
300
19
354
4.8%
465
458
398
386
5.4%
4.6%
485
456
4.7%
4.4%
399.3
5.1%
428
4.6%
6
4.7%
4.5%
4
4.2%
2
150
0
(Forecast)
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
0
Year 2 Power 88
Performance
Innovation & Power of brand
Corporate Data
Corporate Governance
Financial Review
20
NISSAN Annual Report 2012
Dividend
Nissan’s strategic actions reflect not only its long-term vision as a global company to create sustainable
value but also the company’s commitment to maximizing total shareholder return.
We paid year-end cash dividends of 10 yen per share for fiscal year 2011. As a result, total dividend
payment for fiscal year 2011, combined with the 10 yen dividend for the interim, was 20 yen per share.
The dividend payment plan for fiscal year 2012 is to be 25 yen per share, considering the business
condition, risks and opportunities for the year.
DIVIDEND
(Dividend per share, in yen)
60
40
45
34
29
30
24
20
19
11
15
25
10
0
0
(Forecast)
’03
’04
’05
’06
’07
’08
’09
’10
’11
’12
Fiscal 2012 Outlook
In light of the outlook for fiscal 2012, the company filed its forecast with the Tokyo Stock Exchange on
May 11, 2012. Assumptions included retail unit sales of 5,350,000 units, which is an increase of 10.4 %
from the prior year, and foreign-exchange-rates of 82 yen to the dollar and 105 yen to the euro.
• Net revenue is forecast to be 10.3 trillion yen.
• Operating profit is expected to be 700 billion yen.
• Net income is forecast to be 400 billion yen.
• Capital expenditures are expected to reach 550 billion yen.
• R&D expenses will amount to 485 billion yen.
The evolution in operating profit, compared to the fiscal 2011 results, is mainly linked to below key
factors:
• The impact from foreign exchange is a positive 40 billion yen, with the U.S. dollar and Russian ruble
accounting for the majority of this variance.
• The net result of the increase in raw materials/energy costs and our purchasing cost reduction
efforts is a positive 180 billion yen.
• Volume and mix will produce a positive impact of 175 billion yen as a result of the growth in global
sales volume.
• The increase in selling expenses is a negative 125 billion yen mainly due to the increase in volumes.
• Sales finance is a negative 17 billion yen.
• Cost for future growth and others are negative 98.8 billion yen, due mainly to the increase in R&D
and expenses for capacity expansion such as our new plants in Brazil and Mexico.
(All figures for fiscal 2012 are forecasts, as of May 11, 2012.)
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Financial Statements
Corporate Governance
NISSAN Annual Report 2012
Financial Statements
Consolidated Balance Sheets
(Millions of yen)
Prior Fiscal Year
Current Fiscal Year
As of March 31, 2011
As of March 31, 2012
Assets
Current assets
Cash on hand and in banks
Trade notes and accounts receivable
998,822
765,423
738,950
820,008
2,746,836
3,210,342
Securities
158,012
77,476
Merchandise and finished goods
641,055
665,262
Work in process
139,529
153,228
Raw materials and supplies
201,649
200,476
Deferred tax assets
283,789
266,540
Other
519,148
506,947
Allowance for doubtful accounts
(81,955 )
(55,630)
Sales finance receivables
Total current assets
6,345,835
6,610,072
Fixed assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Land
Construction in progress
Other, net
Total property, plant and equipment
Intangible fixed assets
Investments and other assets
Investment securities
645,414
615,921
1,841,480
1,874,277
659,985
649,509
98,663
255,333
391,500
336,206
3,637,042
3,731,246
133,769
120,114
381,549
371,259
Long-term loans receivable
17,147
5,617
Deferred tax assets
69,711
92,378
155,993
144,605
Other
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets
21
(4,353 )
(3,238)
620,047
610,621
4,390,858
4,461,981
10,736,693
11,072,053
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Financial Statements
Corporate Governance
NISSAN Annual Report 2012
Consolidated Balance Sheets
(Millions of yen)
Prior Fiscal Year
Current Fiscal Year
As of March 31, 2011
As of March 31, 2012
Liabilities
Current liabilities
Trade notes and accounts payable
1,181,469
1,377,254
Short-term borrowings
593,095
244,582
Current portion of long-term borrowings
933,976
822,268
Commercial papers
256,601
38,437
87,280
187,198
Current portion of bonds
Lease obligations
77,598
38,190
Accrued expenses
580,350
660,369
116
136
85,688
85,535
Deferred tax liabilities
Accrued warranty costs
Accrual for loss on disaster
Other
Total current liabilities
Long-term liabilities
Bonds
Long-term borrowings
Lease obligations
Deferred tax liabilities
Accrued warranty costs
Accrued retirement benefits
Accrued directors’ retirement benefits
Other
Total long-term liabilities
Total liabilities
12,128
—
572,244
691,259
4,380,545
4,145,228
640,850
584,962
1,422,478
1,877,997
67,135
34,584
463,347
486,699
98,668
100,431
182,155
159,369
914
544
206,818
232,242
3,082,365
3,476,828
7,462,910
7,622,056
Net assets
Common stock
605,814
605,814
Capital surplus
804,470
804,470
2,733,253
3,009,090
Shareholders’ equity
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized holding gain and loss on securities
Unrealized gain and loss from hedging instruments
Adjustment for revaluation of the accounts of the consolidated
subsidiaries based on general price level accounting
Translation adjustments
Total accumulated other comprehensive income
Share subscription rights
(162,024 )
3,981,513
(149,542)
4,269,832
20,862
16,979
1,904
(5,108)
(13,945 )
(13,945)
(1,048,919 )
(1,121,059)
(1,040,098)
(1,123,133)
2,415
2,415
Minority interests
329,953
300,883
Total net assets
3,273,783
3,449,997
10,736,693
11,072,053
Total liabilities and net assets
22
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
Financial Statements
NISSAN Annual Report 2012
Consolidated Statements of Income
(Millions of yen)
Prior Fiscal Year
Current Fiscal Year
From April 1, 2010
To March 31, 2011
From April 1, 2011
To March 31, 2012
Net sales
8,773,093
9,409,026
Cost of sales
7,155,100
7,772,832
Gross profit
1,617,993
1,636,194
Selling, general and administrative expenses
Advertising expenses
187,490
203,650
Service costs
52,865
66,181
Provision for warranty costs
93,842
77,278
Other selling expenses
118,304
141,508
Salaries and wages
333,824
333,745
21,906
24,630
Retirement benefit expenses
Supplies
6,369
5,445
Depreciation and amortization
56,860
48,718
Provision for doubtful accounts or reversal of provision for doubtful accounts
21,425
(8,127)
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
5,786
5,251
181,855
192,076
1,080,526
537,467
1,090,355
545,839
14,551
17,174
Non-operating income
Interest income
Dividends income
Equity in earnings of affiliates
Exchange gain
1,045
5,776
43,022
19,103
—
14,756
Derivative income
14,102
—
Miscellaneous income
13,883
12,343
Total non-operating income
86,603
69,152
Non-operating expenses
Interest expense
28,357
32,892
Amortization of net retirement benefit obligation at transition
10,671
10,146
Exchange loss
28,854
—
Derivative loss
—
20,816
Miscellaneous expenses
Total non-operating expenses
Ordinary income
18,374
16,047
86,256
537,814
79,901
535,090
Special gains
Gain on sales of fixed assets
Gain on negative goodwill
Gain on sales of investment securities
Gain on contribution of securities to retirement benefit trust
Other
Total special gains
Special losses
18,571
8,716
—
24,086
2,458
10,643
—
7,048
6,960
5,498
27,989
55,991
Loss on sale of fixed assets
4,164
Loss on disposal of fixed assets
8,957
7,106
10,891
12,117
Write-down of investments and receivables
2,350
1,218
Loss on adjustment for changes of accounting standard for asset retirement obligations
3,808
-
39,605
29,867
Special addition to retirement benefits
7,200
4,200
Other
8,687
5,320
85,662
480,141
61,752
529,329
Income taxes-current
90,223
115,185
Income taxes-deferred
41,904
36,321
132,127
348,014
28,793
319,221
151,506
377,823
Impairment loss
Loss on disaster
Total special losses
Income before income taxes and minority interests
Total income taxes
Income before minority interests
Income attributable to minority interests
Net income
23
1,924
36,390
341,433
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
Financial Statements
NISSAN Annual Report 2012
Consolidated Statements of Cash Flows
(Millions of yen)
Prior Fiscal Year
Current Fiscal Year
From April 1, 2010
To March 31, 2011
From April 1, 2011
To March 31, 2012
Cash flows from operating activities
Income before income taxes and minority interests
480,141
529,329
Depreciation and amortization (for fixed assets excluding leased vehicles)
404,673
364,122
19,554
20,852
208,221
195,370
Impairment loss
10,891
12,117
Loss on disaster
19,785
8,245
ー
(7,048)
ー
(24,086)
Depreciation and amortization (for other assets)
Depreciation and amortization (for leased vehicles)
Gain on contribution of securities to retirement benefit trust
Gain on negative goodwill
(3,032 )
Increase (decrease) in allowance for doubtful receivables
Provision for residual value risk of leased vehicles (net changes)
Interest and dividend income
Interest expense
Loss (gain) on sales of fixed assets
10,095
(15,596 )
(22,950)
80,933
87,890
(14,407 )
(6,792)
(2,422 )
Loss (gain) on sales of investment securities
(23,968)
(14,291 )
8,957
Loss on disposal of fixed assets
7,106
(10,624)
Decrease (increase) in trade notes and accounts receivable
(131,116 )
(89,495)
Decrease (increase) in sales finance receivables
(319,874 )
(432,957)
Decrease (increase) in inventories
(208,924 )
(70,615)
329,918
317,945
Amortization of net retirement benefit obligation at transition
10,671
10,146
Retirement benefit expenses
53,668
55,141
(33,675 )
(62,695)
Increase (decrease) in trade notes and accounts payable
Retirement benefit payments made against related accrual
(7,826 )
Other
876,249
Subtotal
(2,051)
865,077
Interest and dividends received
13,625
23,070
Interest paid
(81,641 )
(85,398)
Income taxes paid
(140,731 )
(106,452)
Net cash provided by operating activities
667,502
696,297
82,847
1,597
Cash flows from investing activities
Net decrease (increase) in short-term investments
(281,952 )
Purchases of fixed assets
59,120
Proceeds from sales of fixed assets
(400,623)
27,458
(601,702 )
(625,646)
Proceeds from sales of leased vehicles
335,727
317,211
Payments of long-term loans receivable
(29,343 )
(4,222)
Collection of long-term loans receivable
13,251
22,816
(12,221 )
(17,340)
Purchase of leased vehicles
Purchase of investment securities
1,846
Proceeds from sales of investment securities
6,124
Proceeds from sales of subsidiaries' shares resulting in changes in the scope of consolidation
ー
537
Payments for restructuring of domestic dealers
ー
(927)
Net decrease (increase) in restricted cash
90,074
17,336
Other
11,235
(29,374)
(331,118)
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Proceeds from issuance of bonds
Repayment of long-term borrowings
Redemption of bonds
Proceeds from minority shareholders
(685,053)
360,057
(536,782)
724,529
1,379,490
233,087
135,329
(705,607 )
(1,034,056)
(394,147 )
(88,459)
4,116
2,606
(13 )
(9,015)
Repayment of lease obligations
(87,401 )
(81,118)
Cash dividends paid
(20,922 )
(62,748)
Purchase of treasury stock
Cash dividends paid to minority shareholders
Net cash provided by (used in) financing activities
Effects of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Increase due to inclusion in consolidation
Cash and cash equivalents at the end of the period
24
(3,124 )
(13,704)
110,575
(60,315)
386,644
(308,457)
(15,630)
(312,843)
761,495
1,153,453
5,314
261
1,153,453
840,871
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
Executives
NISSAN Annual Report 2012
Executives
Board of Directors and Auditors
Executive Committee Members
Representative Board Members
Carlos Ghosn
President and Chairman
Toshiyuki Shiga
Hiroto Saikawa
Greg Kelly
Carlos Ghosn
Toshiyuki Shiga
Hiroto Saikawa
Board Members
Colin Dodge
Mitsuhiko Yamashita
Hidetoshi Imazu
Jean-Baptiste Duzan
Katsumi Nakamura
Auditors
Masahiko Aoki
Toshiyuki Nakamura
25
Colin Dodge
Mitsuhiko Yamashita
Hidetoshi Imazu
Mikio Nakura
Shigetoshi Ando
(As of June 26, 2012)
Andy Palmer
Joseph G. Peter
Takao Katagiri
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
Executives
26
NISSAN Annual Report 2012
Corporate Officers
President and Chief Executive Officer
Senior Vice Presidents
Corporate Vice Presidents
Carlos Ghosn*
Shiro Nakamura
Asako Hoshino
Hitoshi Kawaguchi
Celso Guiotoko
Minoru Shinohara
Joji Tagawa
Atsushi Shizuta
Toshifumi Hirai
Yasuhiro Yamauchi
Atsushi Hirose
Shigeaki Kato
Shunichi Toyomasu
Greg Kelly
Tsuyoshi Yamaguchi
Masaaki Nishizawa
Makoto Yoshimoto
Akira Sakurai
Takao Asami
Hideyuki Sakamoto
Vincent Cobee
Toshiaki Otani
Shohei Kimura
Trevor Mann
Hideto Murakami
Johan De Nysschen
Shuichi Nishimura
Chief Operating Officer
Toshiyuki Shiga*
External and Government Affairs
Intellectual Asset Management
Design
Corporate Governance
Global Internal Audit
TCSX(Total Customer Satisfaction Function)
Executive Vice Presidents
Hiroto Saikawa*
Region: Japan, Asia
Purchasing
Colin Dodge*
Region: AMIE (Africa, Middle East, India, Europe)
Region: Americas
Yusuke Takahashi
Hiroshi Karube
Mitsuhiko Yamashita*
Hideaki Watanabe
Research and Development
Simon Sproule
Hidetoshi Imazu*
Motohiro Matsumura
Manufacturing
SCM (Supply Chain Management)
Andy Palmer*
Global Product Planning
Global Program Management
Global Market Intelligence
Global IS
Global Infiniti (& Luxury) Business Unit
Global Marketing Communications
Global Corporate Planning (Incl. OEM Business)
Vehicle Information Technology
Performance Program Director
Joseph G. Peter*
Finance
Control
IR
M&A Support
Global Sales Finance Business Unit
Takao Katagiri*
Global Sales
Global Aftersales
Global LCV Business Unit
Global Zero Emission Business Unit
Global Battery Business Unit
Global Datsun Business Unit
Japan Marketing & Sales
* Executive Committee Members
Norio Ota
Rakesh Kochhar
Toru Hasegawa
Keno Kato
Jun Seki
Noboru Tateishi
Fellows
Kimio Tomita
Haruyoshi Kumura
(As of June 26, 2012)
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
Maintaining Trust Through Transparency
NISSAN Annual Report 2012
Maintaining Trust Through Transparency
Corporate governance is one of the important responsibilities of the Company’s management, and its
most important role is to clarify the duties and responsibilities of the members of the management
team. At the Company, clear management objectives and policies are published for the benefit of the
shareholders and investors, and achievements and results are announced early and with as much
transparency as possible. The enhancement of corporate governance by full and fair disclosure is the
responsibility of management.
Internal Control Systems and Compliance
Internal Control Systems for Fair, Transparent Business
Nissan places high value on transparency, both internally and externally, in its corporate management. We
focus consistently on the implementation of efficient management for the purpose of achieving clear and
quantifiable commitments. In line with this principle, and in accordance with Japan’s Companies Act and
its related regulations, the Board of Directors has decided on the Internal Control Systems to pursue
these goals and on its own basic policy. The board continually monitors the implementation status of
these systems and the policy, making adjustments and improvements as necessary. One board member
has also been assigned to oversee the Internal Control Systems as a whole.
Nissan has adopted a system under which the Board of Statutory Auditors oversees the Board of
Directors. The Statutory Auditors attend board and other key meetings, and also carry out interviews with
board members to audit their activities. The Statutory Auditors regularly receive reports on the results of
inspections and plans for future audits from independent accounting auditors, as well as exchange
information to confirm these reports. The Statutory Auditors also receive regular reports from the Global
Internal Audit Office, making use of this information for their own audits.
A Legal Framework Supporting Ethical Business Activities
Nissan’s CSR approach is founded on compliance. We produced the Nissan Global Code of Conduct in
2001, outlining a set of guidelines for all employees of the Nissan Group worldwide. We also produced
guidance for directors and corporate officers regarding compliance, and we hold regular seminars and
educational activities to ensure strict adherence to the rules.
In addition, three regional Compliance Committees have been established under the oversight of our
Global Compliance Committee to form a system for preventing incidents of illegal and unethical behavior
worldwide. The committees work together to maintain and promote our high compliance standards.
NISSAN’S INTERNAL GOVERNANCE SYSTEM
Shareholders
appointment/
dismissal
appointment/
dismissal
appointment/
dismissal
Board of Statutory Auditors
(incl. outside statutory auditors)
audit
Board of Directors
(incl. outside director)
cooperation
Global Internal Audit Office
report
report
Internal Control Committee
Compliance Committee
Information Security Committee
Risk Management Function
Operations Committee
audit
Independent Auditors
Executive Committee
direction/
supervision/
approval
report/
proposal
Management Committees
Each Function
Group Companies
27
Crisis Management Committee
CSR Steering Committee
training/education/
implementation
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Maintaining Trust Through Transparency
Corporate Governance
NISSAN Annual Report 2012
Global Educational Activities to Promote Compliance
To foster compliance awareness throughout the company, Nissan has established groups and placed
officers in charge of promoting compliance policy in each region where it operates. We focus particulary
on education to give that all employees correct understanding of the Code of Conduct and, as a result,
make fair, transparent judgments in the course of their duties.
To ensure full understanding of the code in Japan all employees, including executives, take an e-learning
or video training course based on the Japanese version of the Nissan Code of Conduct—“Our Promises,”
revised most recently in 2010 – after which they sign an agreement to abide by it. In this way we seek to
ensure across the board understanding, making all our people most aware of compliance issues.
A number of education programs to promote compliance are held regularly for all employees in North
America, and a set of universal guidelines has been drawn up for each country in Europe. Compliancerelated training is also being carried out in other regions and markets based on guidelines that take into
account conditions in each of those countries. Moreover, all Group-affiliated companies have introduced
their own codes based on the Nissan Code of Conduct. The code is reviewed every three years, and the
latest version was updated in fiscal 2010. Additionally, we have created sets of internal regulations
globally covering the prevention of insider trading, personal information management, records
management and prevention of bribery and corruption. With these regulations in place, Nissan is working
to prevent compliance infractions.
Our Stance Against Discrimination and Harassment
Item 6 of Nissan’s Global Code of Conduct, “Value Diversity and Provide Equal Opportunity,” is our
requirement to accept, value and respect the diversity to be found among our employees, business
partners, customers and communities where we do business, and to reject discrimination and harassment
in all their forms, no matter how minor they may be. Nissan executives and employees must respect the
human rights of others, and may not discriminate against nor harass others based on race, nationality,
gender, religion, physical capability, age, place of origin or other reason; nor may they allow such a
situation to go unchecked if discovered. We also work to ensure that all employees, both male and
female, can work in an environment free from sexual and other forms of harassment.
Internal Reporting System for Corporate Soundness
Nissan employs an internal reporting system to promote the spirit of compliance among employees and
facilitate sound business practices worldwide. This mechanism allows employees to submit opinions,
questions or requests directly to the company, and it has played an instrumental role in creating a selfmanaged, compliance-oriented corporate culture. This system, which offers full protection to any persons
offering information in accordance with Japan’s Whistleblower Protection Act of April 2006, is known as
the Easy Voice System and has been put in place in all Nissan Group companies in Japan.
Nissan has established a global internal audit unit, an independent department under the direct control
of the Chief Operating Officer (COO), to handle internal auditing tasks. Under the control of the Chief
Internal Audit Officer (CIAO), audit teams set up in each region carry out efficient and effective auditing
of Nissan’s activities on a group-wide and global basis.
FISCAL 2011 GLOBAL COMPLIANCE COMMITTEE ORGANIZATION
NML Board of Directors
Operations Committee
Global Compliance Committee
Global Compliance Officer
Japan, Asia Pacific
Management Committee
Americas
Management Committee
Africa, Middle East, India, Europe
Management Committee
Japan, Asia Pacific
Compliance Committee
Americas
Compliance Committee
Africa, Middle East, India, Europe
Compliance Committee
Nissan Motor Co., Ltd. Compliance Committee
Affiliated Companies Compliance Committee
Dealers Compliance Committee
28
Nissan Motor Co., Ltd.
Divisional Compliance
Committee
A compliance committee has been established in each region under
the governance of the global compliance officer. The committees are
responsible for discovering compliance violations at an early stage
through internal auditing or reports, for solving problems, and for
maintaining and improving internal awareness of the Code of Conduct.
Year 2 Power 88
Innovation & Power of brand
Performance
Corporate Data
Corporate Governance
Maintaining Trust Through Transparency
Security-Related Export Controls
Nissan thoroughly complies with the laws and regulations of
Japan and the other countries where it does business, giving
full consideration to the requirements of the international
community. Part of this effort includes the company’s initiatives
aimed at contributing to global peace and security. Nissan has
established export control rules to prevent the proliferation of
weapons of mass destruction, conventional weapons and any
products or technologies used for their development. In line
with these rules, Nissan implements export controls under an
independent system headed by the company’s chief operating
officer. Affiliated companies also strictly adhere to the same
export control rules, thereby enhancing the entire Nissan
Group’s level of compliance.
29
NISSAN Annual Report 2012
GLOBAL EXPORT CONTROL
POLICY FRAMEWORK
Chief Operating Officer
Export Control Secretariat
(within the Global Headquarters in Japan)
Functions
Regions
Marketing and sales, R&D,
supply chain management,
IT, production, etc.
Japan/Asia Pacific,
Americas,
Africa/Middle East/India/Europe
Ensuring Personal Information Protection and Reinforcing Information Security
Nissan recognizes social responsibility to properly handle customers’ personal information, in full
compliance with Japan’s Personal Information Protection Act. We have set up internal systems, rules
and procedures for handling personal data. All group companies in Japan are fully enforcing these
processes. Moreover, Nissan shares with Group companies worldwide its Information Security Policy as
its basis to reinforce overall information security. We have also established an Information Security
Committee, which implements measures as necessary to further strengthen information security to
prevent information leaks and other such incidents. Furthermore, we regularly carry out various in-house
programs to thoroughly educate and motivate employees to uphold their responsibilities in this re-gard.
The Principle and Approach to Corporate Risk Management
For Nissan, the term risk refers to any factor that may prevent the Nissan Group from achieving its
business objectives. By detecting risk as early as possible, examining it, planning the necessary
measures to address it and implementing those measures, we work to minimize the materialization of
risk and the impact of damage caused, should it arise. Risk management must be a real-world activity
closely linked at all times with concrete measures. Based on its Global Risk Management Policy, Nissan
carries out activities on a comprehensive, group-wide basis.
In order to respond swiftly to changes in its business environment, Nissan set up a department in
charge of risk management, which carries out annual interviews of corporate officers, carefully
investigates various potential risks, and revising the company’s “risk map” in line with impact, frequency
and control level. An executive-level committee makes decisions on risk issues that must be handled at
the corporate level and designates “risk owners” to manage the risk. Under the leadership of these
owners, the company designs appropriate countermeasures. Finally, the board member in charge of
internal controls (currently, the COO) regularly reports to the Board of Directors on progress being made.
With respect to individual business risks, each division is responsible for taking the preventive
measures necessary to minimize the frequency of risk issues and their impact when they do arise as part
of its ordinary business activities. The divisions also prepare emergency measures to put in place when
risk factors do materialize. Nissan Group companies in Japan and overseas are strengthening
communication and in order to share basic processes and tools for risk management, as well as related
information, throughout the Group.
Additionally, a “Corporate Risk Management” website has been put in place as part of our corporate
intranet system, which puts out risk management information to Nissan employees in Japan, North
America, Europe and other overseas regions, as well as to important affiliated companies.
In October 2011, when major flooding occurred in Thailand, Nissan’s local plant was forced to halt
operations in that area for four weeks due to the impact on the supply chain. However, using the
experience we had gained after the Great East Japan Earthquake in March that year, we were able to
minimize the operation suspension period and avoid undue impact on other factories. Nissan treats these
events as valuable lessons and have shared the subsequent review with the entire company. New
scenarios have been incorporated into the drills implemented in March 2012 by the Global Disaster
Control Headquarters. We have made our drills more challenging and have checked the efficacy of the
various measures we have planned with the aim of creating a more effective overall system.
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Risk Management Measures and Actions
1. Risks Related to Financial Market
1) Liquidity
Automotive
The automotive business must have adequate liquidity to provide for the working capital needs of day-today normal operations, capital investment needs for future expansion and repayment of maturing debt.
Liquidity can be secured through internal cash and cash equivalents or external borrowings. As of the end
of fiscal year 2011 (March 31, 2012), Nissan’s automotive business had 781 billion yen of cash and cash
equivalents (compared with 1,133 billion yen as of March 31, 2011). Cash and cash equivalents balance
was exceptionally high as of the end of fiscal year 2010, as Nissan raised cash following the Great East
Japan Earthquake as a countermeasure against an uncertain environment. In addition to cash, Nissan had
approximately 469 billion yen of committed lines available for drawing as of March 31, 2012.
As for external borrowings, Nissan raises financing through several sources, including bonds
issuance in capital markets, long and short-term loans from banks, commercial paper issuance and
committed credit lines from banks. Nissan has a liquidity risk management policy which is intended to
ensure adequate liquidity for the business while at the same time ensuring we mitigate liquidity risks,
such as unmanageable bunched maturities of debt.
Target liquidity is defined objectively considering several factors, including debt maturity, upcoming
mandatory payments (such as dividends, investments, taxes) and peak operating cash needs. We also
benchmark our liquidity targets with other major Japanese corporations and global auto companies to
ensure we are reasonable in our assumptions.
Sales finance
Nissan operates captive sales finance companies in Japan, the United States, Canada, Mexico, China,
Australia and Thailand. In these countries, banks and other financial institutions are also involved in
providing financing solutions to Nissan’s customers and dealers. Additionally, in Europe and other
regions, RCI Banque and several other banks / financial institutions are providing financing to
Nissan’s customers and dealers.
We monitor the liquidity of sales finance companies on an ongoing basis to ensure we have
adequate liquidity to meet maturing debt and continue operations. As a policy, we target to match the
maturity of liabilities with the maturity of assets wherever possible. In some of the countries where we
operate, long-term capital markets are not developed, and thus it is not always possible to be perfectly
match-funded. Match funding policy allows us to meet maturing debt obligations even in an
environment in which we cannot raise additional debt due to the state of capital markets.
In addition to match funding, we manage liquidity risk at sales financing through several measures,
including keeping adequate liquidity in the form of cash and unutilized committed lines,
unencumbered assets (mainly vehicle loans and leases), liquidity support from auto operations to the
extent we have excess cash in auto operations, diversified funding sources and geographical
diversification of capital markets’ access. As of March 31, 2012, sales finance companies’ liquidity
(cash and unutilized committed lines) was
approximately 860 billion yen. Additionally, we
SALES FINANCE BUSINESS
(As of March, 2012)
FUNDING SOURCES
have a healthy mix of secured (24.7%) and
unsecured and other (75.3%) funding sources
Group Finance
which ensure a stronger balance sheet and
(Inter-Company)
Equity 10.7%
incremental liquidity through utilization of
25.5%
unencumbered assets.
ABS Off B/S
Commercial
Paper
0.9%
3.8%
The pie chart below describes our diversified
funding sources in the sales finance business.
During fiscal year 2011, we were able to raise
new financings through bank loans, assetbacked securities, asset-backed commercial
paper, commercial paper and bonds reflecting
our diversified access to financing instruments.
30
ABS On B/S
20.9%
Bonds 8%
S/T Loan
3.8%
L/T Loan 26.6%
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2) Financial Market
Nissan is exposed to various financial-market-related risks, such as foreign exchange, interest rate
and commodity price. It is Nissan’s general policy not to use derivative products as a primary tool to
manage foreign exchange and commodity price risks, as it will not provide a permanent solution to
mitigate the risks. In some cases, Nissan does hedge select currencies and commodity price risks.
Nissan is taking the following measures to minimize financial market risks.
Foreign exchange
As a company engaged in export activities, Nissan is faced with various foreign currency exposures
which results from the currency of input cost being different from the currency of sale to customer. In
order to minimize foreign exchange risk on a more permanent basis, Nissan is working to reduce
foreign currency exposure by such measures as shifting production to the countries where vehicles
are sold, and procurement of raw material and parts in foreign currencies. In the short term, Nissan
may hedge risks in foreign exchange volatility within a certain range by using derivative products in
accordance with the internal policies and procedures for risk management and operational rules
regarding derivative transactions.
Interest rate
The interest rate risk management policy is based on two principles: long-term investments and a
permanent portion of working capital are financed at fixed interest rates while the non-permanent
portion of working capital and liquidity reserves are built at floating rates.
Commodity price
Nissan purchases raw materials in the form of parts provided by suppliers, as well as direct purchases.
Nissan is exposed to the price fluctuation risks of raw materials, no matter whether it is purchased
directly or indirectly.
For precious metals, which are used as catalyst, Nissan is making continuous efforts to reduce their
usage through technological innovation, in order to minimize commodity price risks. In the short term,
Nissan manages commodity price volatility exposure through the use of fixed rate purchase contracts
where the commodity price is fixed for a period of time, and Nissan may also hedge risks in commodity
price volatility within a certain range by the use of derivative products in accordance with the internal
policies and procedures for risk management and operational rules regarding derivative transactions.
3) Sales Finance
Interest rate risk management
The sales financing business is exposed to interest rate risks. Interest rate risk is defined as the
potential variance in the earnings of an entity or the fair value of the portfolio that would result from a
fluctuation in the general level of market interest rates where funds with differing fixed-rate periods or
differing terms are financed and invested.
Nissan measures the risks by using sensitivity analysis with various interest rate scenarios and
determines the risk tolerance level. Nissan controls the interest rate maturities of both assets and
liabilities to maintain the risks within the acceptable tolerance level.
The sensitivity analysis mentioned above uses statistical models, such as the Monte Carlo
simulation method. However, actual fluctuations of market interest rates and their impact may deviate
significantly from the assumptions used in the model.
Nissan enters into interest rate derivative financial instruments to maintain the potential variability of
interest rates at a desired level of risk exposure. The main objective of these transactions is to mitigate
the risks and not to pursue speculative profit maximization.
Credit risks
Nissan is exposed to the risks of failure to recover the full value of financial receivables in its auto
credit and lease business with retail customers and its dealer finance business, due to changes in the
economic situation and the credit quality of customers. Nissan manages the credit risks closely by
establishing effective screening and collection systems and structures.
Credit applicants are all subject to credit assessments of their creditworthiness under a detailed
scoring system. Based on the information directly obtained from applicants and from credit bureaus,
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loan authorization is made in a comprehensive manner by considering the following points: applicant’s
credit history; applicant’s capacity to pay which is estimated by debt ratio, payment to income ratio and
disposable income; applicant’s stability; and loan conditions, including the loan collateral, loan advance
and payment terms. In addition to carrying out this screening process, Nissan takes into account
qualitative information by conducting field visits to customers or referring to past business records with
Nissan, in accordance with characteristics of regional business practices and risks.
Dealer finance for inventory vehicles is authorized on the basis of an internal rating system that
takes into account the financial position of dealers, and, if necessary, personal guarantees and/or
mortgage collateral are taken in pledge in addition to inventory vehicle collaterals. These scoring
models are regularly reviewed and revised to keep them current with actual practice.
In some regions and products, Nissan also offers different pricing depending on the applicant’s
credit score to compensate the risks.
As a matter of accounting policy, Nissan maintains an allowance for doubtful accounts and credit
losses adequately to cover probable losses. Nissan makes a best effort to recover the actual losses
from bad debt accounts as quickly as possible by taking necessary actions, including flexible and
effective organization changes for collection and utilization of third-party collection services.
Residual value risks
Vehicles on operating leases and some balloon type credits, where Nissan is the lessor, are
guaranteed end-of-term residual value by Nissan. Nissan is therefore exposed to the risks that sales
value of the vehicle could fall below its contractual residual values when the financed vehicle is
returned and sold in the used car market at the end of the contract term.
To mitigate the risks mentioned above, Nissan objectively sets contractual residual value by using the
future end-of-term market value estimation by a third party such as Automotive Lease Guide in North
America, and the estimation from statistical analysis with historical data of the used car market in Japan.
To support used car market value, Nissan takes several strategic initiatives, including control of
sales incentives for new car sales promotion, fleet sales volume control and introduction of the
Certified Pre-owned program.
As a matter of accounting policy, Nissan evaluates the recoverability of carrying values of its
vehicles for impairment on an ongoing basis. If impaired, Nissan recognizes allowance for potential
residual value losses in a timely and adequate manner.
4) Counterparty
Nissan has a certain amount of exposures to counterparties in making financial transactions, such as
bank deposits, investments and derivative contracts. While we work with competitive banking
counterparties, Nissan manages its counterparty risk by using a certain evaluation system.
The evaluation system which Nissan uses is based on ratings of counterparties’ long-term credit
and financial strength, and the level of their shareholders’ equity. The system is applied to Nissan as a
group, and we set limits in terms of amount and term on a consolidated basis. By making the analysis
monthly, we are able to take action on a timely basis when any concerns arise.
5) Pension
Nissan has defined benefit pension plans mainly in Japan, the United States and the United Kingdom.
Funding policy for pension plans is to make periodic contributions as required by applicable
regulations. Benefit obligations and pension costs are calculated using many different drivers, such as
discount rate and rate of salary/wage increase.
Plan assets are exposed to financial market risks as they are invested in various types of financial
assets including bonds and stocks. When the fair value of these assets declines, the amount of the
unfunded portion of pension plans increases, which could materially affect cash-out and costs for
Nissan in the form of future contribution to the pension plans.
As countermeasures to manage such risks, the investment policy of these pension plans is based
upon the liability profile of the plans, long term investment views and benchmark information regarding
asset allocation of other corporate pension plans.
In addition, Nissan convenes Global Pension Committees on a periodic basis to review investment
performance, manager performance, review asset allocations and discuss other issues related to
pension assets.
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2. Risks related to Business Strategies and Maintenance of Competitiveness
1) Product Strategy
To secure our profitability and sustainable growth based on our future product lineup plan, in our
product strategy developing process, we monitor the impact of various risk scenarios, such as global
market changes and demand deteriorations, to our future profitability (COP) based on our plan.
<Example of Risk Scenarios>
1. Drastic decline of total global demand, using past examples as reference.
2. A demand shift between vehicle segments drastically faster than our mid-term planning
assumptions.
3. A demand shift from the matured markets to the emerging markets drastically faster than our
mid-term planning assumptions.
We periodically monitor the impact of these scenarios to secure our future profitability and
sustainable growth, and also update our future lineup plans periodically based on the results. To
improve the robustness of our product lineup against these risks, we take the following
countermeasures as our main direction when planning our product strategy.
• Expand availability of individual products across markets to mitigate the risk of single market
demand fluctuations.
• Increase volume and efficiency per product through a consolidation and rationalization of the
portfolio to lower the breakeven point and thereby reduce the profit risk of global Total Industry
Volume declines.
• Prepare a more balanced product portfolio meeting needs in a broader range of markets and
segments reducing reliance on specific large markets.
2) Quality of Products and Services
Nissan is making a companywide effort toward “Enhancing Quality,” one of the six areas of focus
defined by Nissan Power 88, our mid-term business plan through fiscal 2016. Under this plan, actions
are being carried out with numerical targets for the following areas.
• Product quality: Quality of our products based on the customer’s actual experiences as an owner
of the vehicle
• Perceived quality and attractiveness: Customers’ impressions of a vehicle’s quality when they look
at and touch it in a dealer’s showroom
For example, the target for “product quality” is to attain the top level in the Most Influential Indicators
(MIIs) in each region. In order to achieve the target, internal indicators for each model correlating with
the MIIs have been established. Progress of all quality improvement activities is monitored on an
ongoing basis with those internal indicators.
With respect to new model projects, in order to achieve quality targets, milestone meetings are held
for processes from design, production preparation and production, at which key check points are
confirmed, such as achievement of quality targets, prevention of recurring problems, and adoption of
measures for potential risks related to new technology and mechanisms and design changes.
Commercial production can be started after confirmation at the Start of Production (SOP) Judgment
Meeting, which confirms all issues are solved and quality target can be achieved. Final decision that
the model can be sold is made at the Delivery Judgment Meeting after confirmation of the quality of
commercial production and preparedness for service/maintenance.
As described above, Nissan is implementing thorough quality checks before new model launches.
Nissan is advancing quality improvement activities after launch as well by constantly gathering quality
information from markets and promptly deploying countermeasures if problems arise. In case safety or
compliance issues do occur, necessary actions such as recalls are implemented with close
cooperation with market side team based on a management decision reached by an independent
process. Incidents are thoroughly investigated and analyzed, and the lessons are applied to existing or
upcoming models to prevent a recurrence.
In addition to the above described activities, such as quality assurance at new model project and
quality improvement activities on daily basis, the “Quality Risk Management” framework has been
newly developed from fiscal 2009. While quality-related risks have been assessed and dealt with for
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new models, as described above, the new framework represents a higher-level system to ensure
successful quality management for both on-going and future projects. It involves an objective
evaluation of whether risk exists and the level of such risk for the Company and the assignment of
responsible persons based on the level for follow-up activities. These processes are implemented by
the Quality Risk Management Committee, chaired by an EVP twice a year.
3) Environment, Climate Change
The automotive industry is affected globally by various regulations related to the environment and
safety, such as exhaust emissions, CO2/fuel efficiency, noise and recycling, and these regulations
are getting more stringent year by year. In this context, one effective solution from a long-term
perspective will be widespread use of zero-emission vehicles. Nissan started sales of the Nissan
LEAF, the world’s first affordable, mass-produced EV, in 2010. As the Renault-Nissan Alliance, we
have promoted partnership formation to develop a zero-emission society with national and local
governments.
Additionally, Nissan will reduce CO2 emissions by continuously developing technologies to
improve fuel efficiency in internal combustion engines and bringing them widely into the market. In
particular, we will promote low CO2 output technologies named PURE DRIVE, such as our hybrid
system, fuel efficient direct injection engine and continuously variable transmission (CVT).
Stricter controls on the environmental impact of substances are being sought in countries around
the world. Nissan has steadily advanced efforts to meet these requirements and has established
voluntary standards to meet the environmental regulations enacted in countries worldwide in an
effort to reduce the potential release of environment-impacting substances.
Demand for natural resources such as metals and oil steadily increases in response to the rapid
economic growth of emerging countries. In addition to promoting reduced use of virgin natural
resources through resource-saving and resource-recycling measures, it is becoming important to
procure natural resources that have a lower impact on the Earth’s ecosystems, not only from the
standpoint that these resources are limited, but also considering the wide-ranging effects that
resource extraction has on ecosystems. In the Nissan Green Program 2016—an environmental midterm action plan announced in 2011—Nissan has raised to 25% the target for the use of recovered
material in new vehicles by 2016. To achieve this, we will promote design centered on the vehicle
life cycle, reduce waste and promote expanded use of recycled materials.
The issue of water resources is ever more serious with the retreat of glaciers and rainfall
fluctuation due to climate change, in addition to increasing water use due to the growing world
population and economic development. Nissan, which uses water resources in its production
process, deeply recognizes the importance of this issue and continuously works to preserve water
resources around the world, such as by reducing consumption and recycling water discharged in the
production process.
The purchasing divisions of Nissan and Renault carry out supply-chain management in a manner
consistent with The Renault-Nissan Purchasing Way, a booklet outlining policies for dealing with
suppliers, and the Renault-Nissan CSR Guidelines for Suppliers. With respect to environmental
issues, we began to set standards for the efforts of our automobile parts and material suppliers in
the form of the Nissan Green Purchasing Guidelines. Through these purchasing guidelines we seek
to share our environmental principles and action plans with our suppliers and to promote the
reduction of environmental impact throughout the entire supply chain.
Thus, Nissan is working to achieve autonomous guidelines and targets as part of its corporate
social responsibility as well as to comply with laws and regulations. In order to promote this
environmental management on a global basis, the Global Environment Management Committee
(G-EMC) chaired by the COO makes decisions on general direction and proposals to the Executive
Committee. The Environmental Planning Group within the Corporate Planning Department makes
decisions on activity targets for each department and region and conducts effective follow up of the
progress based on Plan-Do-Check-Act (PDCA) management.
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OUR FRAMEWORK FOR GLOBAL ENVIRONMENT MANAGEMENT
Stakeholders
Communication
Key Issues
Reducing CO2 Emissions/
Shifting to Renewable Energies
Air, Water, Soil, Biodiversity
Products Manufacturing Marketing
&
&
&
Technology
Logistics
Sales
Business
Partners
Resource Recycling
Nissan Global Environment Management
Sincere Eco-Innovator
NISSAN’S GLOBAL ENVIRONMENT MANAGEMENT ORGANIZATION
Functional,
regional focuses
Global,
corporate focuses
CEO
Executive
Committee
Global
Environment
Management
Committee
35
Plan
Act
Global
Environmental
Planning
Office
Check
PDCA
Do
PDCA
PDCA
Customers
Business
partners
Employees
Environmental
Advisory Meetings,
etc.
Shareholders
and investors
Communities
and future
generations
4) Compliance and Reputation
As described above, Nissan produced the Nissan Global Code of Conduct for all employees of the
Nissan Group worldwide. To ensure thorough understanding of the code, training and education
programs such as e-learning are improved and the compliance situation is monitored by the Global
Compliance Committee. Nissan has also adopted the internal whistle blowing system (Easy Voice
System). This allows any employees to submit opinions, questions, requests or suspected compliance
issues directly to Nissan’s management.
Additionally, we have created sets of internal regulations globally covering the prevention of insider
trading, personal information management, records management and prevention of bribery and
corruption. Nissan makes efforts to prevent reputation risk to the company by continuous
implementation of various education and training programs.
3. Business Continuity
1) Natural Disasters Measures
In case of an earthquake measuring 5-upper or higher on the Japanese seismic intensity scale or
other natural disasters causing heavy damage affecting Nissan’s business activities, a First Response
Team (organized by the main units of the Global Disaster Headquarters) will gather information and
decide actions to be taken based on the information. If necessary, the Global Disaster Headquarters
and Regional Disaster Headquarters will be set up to gather information about employees’ safety and
the damage situation of facilities and to work for business continuity.
At the same time, efforts to develop a Business Continuity Plan (BCP) are being carried out with
the involvement of suppliers. These include assessment of the priority of work by each and every
function and development of countermeasures to continue priority work. The BCP will be reviewed
annually in the process of the PDCA cycle.
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ORGANIZATION FOR DISASTER RECOVERY (EARTHQUAKE)
< Global Disaster Headquarters >
Information flow
< First Response Team >
Chief
Decision maker for important issues
• EXAF (Control Center)
• HR
• COM & CSR
• MFG
• PURCH
• M&S
• SCM
• Security
• HQ Facility Management
Decision / Instruction
Secretariat
Report
Deputy Chief
Responsible for supportive action
Deputy Chief
Responsible for recovery action
Decision / Instruction
Decision / Instruction
Report
Report
Communications & CSR
Production Control
External & Government Affairs
Production Engineering
Human Resources
Manufacturing HR
Asset Management
Purchasing
Finance
Information System
Supply Chain Management
R&D Administration
Market & Sales
Parts Logistics
Affiliated Companies Administration
Decision / Instruction
Report damage situation
Decision / Instruction
Report damage situation
< Regional Disaster Headquarters >
Chief
Deputy Chief
Secretariat
EXAF
HR
MFG
<Policy and Principles in Case of Earthquake>
1. The first priority is human life (utilization of employee safety confirmation system)
2. Prevention of secondary disaster (in-house firefighting organization, stockpiling, provision of
disaster information)
3. Speedy disaster recovery and business continuity (measures for hardware, improvement of
contingency plan and development of BCP)
4. Contribution to local society (cooperation/mutual aid with neighboring communities, companies,
local and central governments)
The Global Disaster Headquarters and Regional Disaster Headquarters conduct simulation training
assuming a large earthquake to prepare for a catastrophe. The drills test the effectiveness of this
organization and contingency plan and clarify the issues to be improved. The contingency plan is
reviewed based on the feedback.
In the aftermath of the March 11, 2011, disaster, our periodic simulation training helped to ensure
the smooth launch of our Global Disaster Headquarters and Regional Disaster Headquarters on the
initiative of the First Response Team. This also helped to complete of confirmation of employees’
safety and checks on the extent of the damage.
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Additionally, based on the policy of contribution to local society, we reacted rapidly to provide rest
space to people who could not return home on March 11 and to support damaged areas.
At the stage of business recovery, the Disaster Headquarters and the project teams of each
function continuously shared up-to-date information and were addressing the issues for production
and business recovery with companywide cooperation. It was effective for the quick recovery of our
total supply chain, including parts supply, production, logistics, sales and services.
The response to the March 2011 disaster was reviewed during fiscal 2011 to identify issues that
came to light on a function-by-function basis and to consider countermeasures. In March 2012,
simulation training was conducted based on a new scenario incorporating the review findings, and the
new measures were verified.
Utilizing the PDCA cycle, disaster measures will be advanced to address additional issues raised
during training and in response to recent changes in the government’s anticipated seismic scale
announcements. The Global Headquarters building, where the Disaster Headquarters has been set up
(built in August 2009), has an earthquake-resistant structure using vibration-controlling brace
dampers. Safety is assured even in the case of a maximum-level earthquake at the site. Inspections
after the earthquake confirmed that the building had no problems whatsoever with its safety and
functions.
2) Pandemic
In response to the outbreak of H1N1 type influenza in April 2009, Nissan established a global policy
for infection prevention. Each region has organized a response team and has promoted concrete
countermeasures based on the policy. Infection status can be monitored globally thanks to firmly
developed reporting lines between the global response team and each regional team.
Nissan has promoted countermeasures based on three basic principles stated in the global policy,
which are:
1. First priority on employees’ health and lives
2. Prevention of the spread of infection
3. Continuity of business operation
As specific actions, Nissan established the “guidelines for employees’ action” which stipulated
actions to be taken by employees, Sections and Companies, and kept employees informed.
Nissan also developed a Business Continuity Plan (BCP) for each business section, with several
triggers to invoke the BCP depending on the infection ratio, to maintain business continuity even
under a high infection situation.
Nissan will keep prepared for contingencies like avian flu through its PDCA cycle, such as by
updating response team members and the BCP, carrying out educational activities for infection
prevention and stockpiling sanitary and medical goods.
3) Countermeasures for Production Continuity Risk
Nissan’s production division has dealt with various risks related to the three elements of production, as
listed in the chart below. Particularly for natural disasters, we have worked over the years on
continuous prevention countermeasures to physical infrastructure (quakeproofing and reinforcement
of buildings and other facilities), maintained an operations recovery manual to shorten recovery time
and regularly executed BCP simulation drills. Learning from the lessons of the Great East Japan
Earthquake and the floods in Thailand, we are reviewing and strengthening our activities. More
specifically, we have set the period after which production is to be resumed following a large-scale
disaster to two weeks, and we have clarified necessary measures and produced action plans so that
this can be achieved. In each business facility, the operations recovery manual has been improved with
the addition of more practical content. We have begun regular audits of the manuals to confirm that
they are in the proper condition to be executed as written.
In addition to such countermeasures to natural disasters, it is absolutely important to manage risks
associated with parts procured from Leading Competitive Countries (LCCs) in order to expand
markets globally. To deal with such risk, Nissan has been conducting risk assessment before making
sourcing decisions, providing support for improvement activities after sourcing, implementing quality
checks at key points in the production and logistics process to prevent the production and utilization of
imperfect parts and enhancing activities to minimize supply capacity risk in order to secure global
market expansion and growth.
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3 elements of
production
NISSAN Annual Report 2012
HR/Workforce
Risk factor
Natural disasters (earthquakes)
• Reinforcement of office buildings
(completed)
• Development of earthquake response
manual, implementation of
evacuation drills (once/year)
• Conducting of disaster prevention
drills (once/year or more)
Purchased parts/
Raw materials
Facilities/Equipment
• Assessment of earthquake
preparedness of major suppliers
located in high quake-risk areas
(FY08)
• Reinforcement of buildings &
machinery (continued)
• Planning to adopt damage
reporting system on web base
(FY10)
• Regular audits of each
business facility
• Review of facility recovery
manual (FY11)
• Confirmation of BCPs to be
implemented at time of disaster
by suppliers in high quake-risk areas
(FY11)
Fire
Workplace injury
• Risk assessment based on F-PES
(Fire Prevention Evaluation
System) (once/year)
• Same as on the left
• Risk assessment based on SES
(Safety Evaluation System)
(once/year)
• Same as on the left
• Same as on the left
• Same as on the left
• Revision of equipment standard
based on the assessment result
• Assessment for health & safety
management system (once/year)
Pandemic
• Development of flu response
manual (FY09)
• Requested suppliers to develop
response manual coordinated with
Nissan
—
Demand fluctuation
• Backup from other Nissan plants
(as needed)
• Regular check of demand
projection and supply capacity;
implementation of measures
• Installation of flexible
manufacturing system (completed)
• Backup from other companies (as
needed)
• Employment of short-term
employees (as needed)
Machinery breakdown
—
• Regular check of demand
projection and production capacity;
implementation of measures
• Development of complementary
production system for main power
trains
—
• Share past incident experiences
and reflect them in preventive
maintenance
• Reflect them in equipment standards
Electric power shortage
—
—
• Thoroughgoing energy conservation
efforts
• Flexibility in plant operations and
working hours in response to
requests from the government or
power companies
Expanding LCC parts
adoption
—
• Assessment of monozukuri ability
before supplier sourcing and
support for improvement activities
after sourcing
—
• Quality assessment at production
preparation phase
• Quality check at mass production
phase (action “Gate 1-3”)
Decrease of skilled workers/
experts
38
• Planning and implementation of
training program at each plant to
develop skilled workers (FY10)
• Global development of human
resources through the Global Pilot
Plant program (FY11)
• Development of experts to teach
technical skills (planning and
implementation from FY12)
—
—
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4) Supply Chain Continuity
Control was enhanced as follows to prepare for increased supplier risk.
Response to suppliers’ financial risk
(1) Risk assessment (annual)
• Work with Alliance partner Renault to conduct financial assessments of suppliers based on the
latest data on a global basis.
(2) Prompt decision on risk aversion
• Prompt decision making by a cross functional committee based on risk assessment findings
• Thoroughgoing monthly management of risks for each supplier and anticipated expenditures
• Steady implementation of the above operational process
Response to suppliers’ disaster risk
(1) Ensuring business continuity
In fiscal 2011, cooperation with suppliers was an essential factor in the recovery from natural disasters
like the Great East Japan Earthquake and the floods in Thailand. The fruits of such efforts included
support for affected suppliers and early restart of production. Some of the major initiatives are as
follows:
• Sharing of information relating to production recovery with suppliers frequently and from an early stage
• Soliciting of feedback from suppliers in advance of the rolling blackouts and weekend operations
during the summer period, enabling the provision of support for power shortages as necessary
• Establishment of a BCP for the supply chain (for both Japan and Thailand).
(2) BCPs for overseas operations
In fiscal 2012, Nissan plans to introduce measures taken in Japan to overseas operations besides
Thailand and to establish similar BCPs for those regions.
5) Risk Financing and Loss Prevention
Global Insurance Management Policy
Nissan manages hazard risk on a global basis with risk financing techniques that combine selfretained risk with external risk transfer via insurance.
In order to minimize the cost of risk, Nissan adheres to the following global insurance management
policy. This policy has provided appropriate coverage for damage resulting from the unpredictable and
massive disasters that the world has seen in recent years.
• Predictable risks with low impact and high frequency
→ Retained risks up to an acceptable level on a consolidated basis by the company
• Unpredictable risks with low frequency and high impact or shock value
→ Risks whose financial impact may exceed the acceptable level of self-retention are
transferred outside the company via insurance
Global Insurance Program
In order to minimize the cost of hazard risks and manage risks occurring globally and interdependently
in a concentrated manner, global insurance programs have been established for main lines of
insurance. The Finance Department in the Global Headquarters decides insurance conditions and
structures, and negotiates directly with insurance companies for these global programs. The insurance
companies are important strategic partners, and they are thus decided in consideration of risk spread
and financial solvency.
The following risks are covered in this way.
• Property damage and business interruption by accidents
The program covers risks not only for property damage but also for business interruption and
contingent business interruption due to accidents, taking into consideration the global expansion
of the supply chain for products and parts. Coverage limits are determined based on the probable
maximum loss amount measured by third-party experts.
We achieved further improvement and optimization of insurance conditions by negotiating with
insurance companies together with our Alliance partner Renault from fiscal 2011.
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• Transportation and storage of vehicles and products for sales
This program covers risks relating to transportation and the supply chain for parts and products
globally. By covering risks spread geographically under a global program, we can manage loss
data on a global basis and ensure stability of insurance costs.
From fiscal 2011, this program was also combined with Renault’s program for negotiating with
insurance companies to achieve best possible results utilizing synergies of scale.
• Product liability
To manage this risk, we have insurance programs suitable for the legal systems and practices in
each region. The programs are led by the Global Headquarters in order to implement a consistent
strategy globally.
Utilization of Captive Insurance Company
For the purpose of more efficient self-retention on a consolidated basis, Nissan Global Reinsurance, a
Bermuda-based captive insurance company (an insurance company of the Nissan Group) is utilized to
reinsure a certain amount of risk for each of our global programs.
Utilization of a captive insurance company enables the following:
• Helps to reduce insurance costs by obtaining the minimum necessary insurance
• Each group company can obtain necessary coverage
• Can gather and analyze loss data below self-retained limit
Loss Prevention Activities
Nissan conducts loss prevention activities to improve loss results and reduce the cost of premiums on
an ongoing basis. Since the global insurance programs have been introduced, loss prevention activities
have been promoted more actively and globally to maintain low premium rates. Examples of Nissan’s
loss prevention activities include conducting risk engineering surveys and obtaining recommendations
for safety from third-party experts, creating manuals for actions in the event of typhoons and
constructing hail nets to prevent hail damage.
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Information
Financial Data
To obtain more detailed financial information,
please visit our IR website noted below.
http://www.nissan-global.com/EN/IR/
For further information, please contact:
Nissan Motor Co., Ltd.
1-1, Takashima 1-chome, Nishi-ku,
Yokohama-shi, Kanagawa 220-8686, Japan
Investor Relations Department
Tel: 81 (0)45-523-5520
Fax: 81 (0)45-523-5770
E-mail: [email protected]
Global Corporate Communications Department
Global Communications Division
Tel: 81 (0)45-523-5552
Fax: 81 (0)45-523-5770
Corporate Information Website
http://www.nissan-global.com/
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